Effect of Risk Management Strategies on Growth of Data Centers in Kenya

Allan Tarus () and Prof. Allan Kihara ()

Journal of Business and Strategic Management, 2025, vol. 10, issue 12, 36 - 55

Abstract: Purpose: The primary objective of this study was to examine how selected risk management strategies influence the growth of data centers in Nairobi, Kenya. The selected risk management strategies included in the study comprised of financial risk management, strategic risk management, market risk management, and operational risk management. Methodology: A descriptive research design targeted professionals across 15 operational data centers, including operations managers, risk and compliance officers, infrastructure engineers, and senior managers. A census approach was used to include all 110 eligible professionals, of whom 92 completed the structured questionnaires, resulting in a response rate of 83.6%. Findings: The findings showed that financial risk management has a strong and statistically significant positive effect on the growth of data centers. The correlation was strong (r = 0.700, p = .000), explaining 49.1% of the variability (R² = 0.491). Regression analysis showed β = 0.648, t = 9.310, and F = 86.683 (p = .000). Strategic risk management also demonstrated a strong positive effect. Correlation analysis revealed a significant association (r = 0.731, p = .000), explaining 53.4% of the variance (R² = 0.534). Regression results indicated β = 0.780, t = 10.150, and F = 103.017 (p = .000). Market risk management showed the highest influence on datacenter growth. Correlation analysis showed a very strong and statistically significant relationship (r = 0.853, p = .000), explaining 72.8% of the variance (R² = 0.728). Regression analysis produced β = 0.868, t = 15.513, and F = 240.648 (p = .000), confirming market risk management as the most impactful strategy among the four studied. Operational risk management also demonstrated a strong positive influence on growth. Correlation was strong and significant (r = 0.746, p = .000), explaining 55.7% of the variance (R² = 0.557). Regression analysis showed β = 0.801, t = 10.628, and F = 112.956 (p = .000), reinforcing the role of operational controls in promoting infrastructure resilience and reliable service delivery. In conclusion, the study revealed that financial, strategic, market, and operational risk management strategies each have strong, positive, and statistically significant effects on the growth of data centers in Nairobi, Kenya. Unique Contribution to Theory, Practice and Policy: To accelerate sustainable growth, data center operators should invest in formalized, data-driven risk governance systems, integrate market intelligence and forecasting into decision-making, and reinforce operational readiness through automation, training, and cybersecurity.

Keywords: Financial Risk Management; Strategic Risk Management; Market Risk Management; Operational Risk Management; and Data Centres Growth (search for similar items in EconPapers)
Date: 2025
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