Assessment of risk management practice of small and medium scale enterprises in the Sekondi-Takoradi Metropolis, Ghana

Abstract

After a decade of reforming policy, building and developing the multi-sector market economy, Small and Medium Enterprises (SMEs) in Ghana have developed strongly and contributed to creating employment, increasing GDP, and raising the nation’s volume of exports. However, SMEs have found difficulties on the way to development due to lack of risk management practices, and uncertainty within the business environment. As a result, SMEs often faced obstacles during their operations. This dissertation examines the relationship between risk management practices of SMEs in Sekondi-Takoradi Metropolis to determine whether absence of risk management practices impact on SME survival. Objectives of the dissertation are; to investigate risk management practices of SMEs in Sekondi-Takoradi, and to contribute to knowledge of risk management practices of SME survival. The study was conducted using the simple random sampling method, a total sample of fifty (50) SMEs owner/mangers in the metropolis were selected for the study. The main source of data collection was a primary data, through the use of descriptive research design a well – structured questionnaire was designed and administered on the fifty (50) SMEs owner/managers selected. The result of the study revealed that most of the SMEs do not efficiently manage their business risk due to inadequate knowledge of basic accounting records keeping and insurance policies as a measure to militate against any eventualities which threatens their survival and growth. The study recommended that there is the need to organized workshops and training seminars and also formation of chambers for SMEs to adequately equip them on the need to keep proper accounting records and to cover their business with insurance policies as a measure of mitigating risk and ensuring stability in the SMEs business operations.