A structural framework to assess the influence of CSFS on risk management case study: Oil and gas sector in Iran

Abstract

With regard to changing business environment over the last two decades, risk management has become a main area of business practice to define, analyse and control uncertainties. It necessitates identifying critical areas of planning and actions which must be considered to achieve effectiveness named Critical Success Factors (CSFs). The aim of this study is to classify and prioritize the CSFs necessary for risk management in oil and gas sector in Iran. In order to do the research a comprehensive set of CSFs were selected in the existing streams of research. Accordingly ten CSFs were identified named commitment and support, communication, culture, structure, IT, process management, resources, training, strategy and measurement. The quantitative method was employed in data collection by using questionnaire. Then to evaluate the influence of each CSF on risk management, an empirical study was conducted by Principal Components Analysis (PCA) by using SPSS package to classify CSFs and extract main factors. The CSFs are categorized into three components; management, operation and context. Then, the extent to which each CSF impacts on risk was measured through a structural model by using Confirmatory Factor Analysis (CFA) by applying Smart PLS package. Consequently, the obtained results indicated that two components; management and context had eigen value greater than one, acceptable reliability (Cronbach's alpha and Dillion- Goldstein's ρ (D.G.'s ρ) >0.7) and validity (AVE>0.5). Furthermore, this framework showed a satisfactory fitness (GoF = 0.76). This study provides with top managers key insight into the CSFs influencing risk management to proper resource allocation. © Maxwell Scientific Organization, 2014.