Abstract:
This study ascertained the financial risks faced by small and medium enterprises, the case of Naatoa Company Limited. The descriptive survey design was used for the research. A simple random sampling technique was employed in selecting 100 out of the total population of 230 employees. The views of 120 respondents, 71 males (59.2%) and 49 females (40.8%), were collated for the study. It was seen that most respondents had, at least, sought education. 96% of respondents had some level of education. It was also realised that the company faces all categories considered under market risk and the market risk itself. Per percentages, all the risk categories found under market risk (Equity risks, Interest rates, Exchange rates, Commodity prices) fell between 79% to 91.3%. According to the research, credit risk is pervasive, but organisations focus less on it than on risks like losing a supplier or their good name. But, all of these other factors might affect the financial risk itself. Financing/Liquidity Risks were slightly closer to average than credit and market risk, which appeared to be a significant factor. In general, the results of the risk management strategies and tools show that Naatoa Company Limited considers most of the strategies to manage their risks. Companies are urged to recognise the significance of financial risk management and how globalisation and the resulting expansion of organisations’ limits for value creation—through sourcing, commercial alliances, and entry into new markets—reinforce this relevance
