Digital risk exposure and digital transformation success: The moderating role of IT risk management effectiveness

This study investigates the impact of digital risk exposure on the success of digital transformation in Gulf-based firms while considering the moderating role played by IT risk management effectiveness. Based on a panel data set of 550 firm‐year observations during the period 2012–2023, methodologically, the study applies fixed effects, high dimensional fixed effects, two‐stage least squares and system GMM technique to control for firm heterogeneity, endogeneity, and persistence in transformation outcomes. More double clicks increase risk improvement, which is found to be negatively related to transformation success, indicating evidence of the need for solid risk mitigation and resilience strategies. Covariates such as digital culture, firm size, IT system complexity, leverage, and availability of digital talent further moderate performance indicating that the mediating role of organizational readiness is contingent upon available resources. Furthermore, IT risk management effectiveness has a buffering effect (H2), but the relationship is not universally significant, implying that risk management alone is insufficient to fully mitigate digital risks. On an aggregate level, the results highlight the importance of shared governance mechanisms, risk planning, and the ability of companies to achieve effective and sustainable digital transformation across GCC companies.