An Investigation of Risk Management strategies on small to medium enterprise’s growth

Author

Tariri, Jowa.

Title

An Investigation of Risk Management strategies on small to medium enterprise’s growth

Abstract

This research is about an investigation of risk management strategies on small to medium enterprise’s growth. The country is facing hyperinflation, recessions and credits are attracting high interest rates. The benchmark interest rate in Zimbabwe was last recorded at 200 percent as enacted by the RBZ (2022). At the same time, there are also problems emanating from unsystematic risks such as lawsuit, strikes, theft, successful and unsuccessful marketing programs, winning or losing a major contract and risk of failing to make profit. The biggest problems SMEs face include rivalry, insecurity, debt collection, a lack of operating capital, and power outages. Aside from political unpredictability, high material costs, poor demand, and restrictive bylaws, these enterprises also face a number of other difficulties. In this regard, this study sought to find out on the nature of the risk management practices implemented by several SMEs in the country whether they have better guarantee the SME’s growth in the foreseeable future. The objectives of the study are; to explore SME’s awareness of risk and risk management; to check how SMEs are managing risk to ensure their business’s growth; to determine the risk management challenges faced by SMEs as they grow and to generate ways to curb the risk management challenges faced by SMEs to ensure business growth. The findings indicated that participants in the SMEs sector have acquired various academic achievements which include certificate, diploma, degree and masters. The findings also indicate that there is a week positive correlation of 0.044 between risk management strategies and the risk management controls used. The findings also indicate that the main challenges faced when trying to manage risks are as follows; failure to use appropriate risk metrics, mismeasurement of known risks, failure in communicating risks to top management and failure in monitoring and managing risks. SMEs are facing a lot of challenges in the management of various types of risks. The challenges are increased by shortages of resources to hire professional risk advisors. Since SMEs are mainly operating on a small scale, they usually use reactive approach to risk management as they do not have the team to proactively detect the risk before it transpires. The risk identification and treatment are poor in SMEs and this led to various challenges in managing the risk. The study recommended that Regulation of SMEs is very critical since these firms have a major contribution to the growth and development in a country. The regulators need to impose a control which push the SMEs to have proper structures to capture risk management The SMEs managers are the gatekeepers for various SMEs, in this regard, they need to monitor the risk management proceedings in every SMEs so that their growth can be noticed in the short and long-term. As the focal people who can invest into the any firm, the investors need to check the organizational set-up of various SMEs so that they can influence the construction of sound and robust risk management schemes.

Date

June 2022

Publisher

BUSE

Keywords

Risk Management,

Medium enterprise's growth,

Hyperinflation,

Supervisor

Mrs. Mauchi,