The Impact of Risk Exposure and Management on the Survival of Small and Medium Enterprises in Nigeria.

Abstract

In this paper, an attempt has been made to investigate the impact of risk exposure and its management on the survival of small and medium scale enterprises in Nigeria. Consequently, the specific focus of the study has been to examine the impact of operational risk on the survival of small and medium enterprises (SMEs), the effect of credit exposure on SMEs and the effect of market risk on SMEs in Nigeria.  Primary data were used for this study sourced through the questionnaire administered on respondents and responses were analyzed using descriptive statistics of the KMO and Bartlett’s test. It was found that return on assets and return on equity are inversely related risk and that market risk leads to liquidity crisis while operational risk impacts negatively on governance and labour turnover. It was observed that the objective setting helped in enterprise risk management among SMEs. It was therefore recommended that to hedge risk, strategic management is imperative hence SMEs must go beyond conventional risk management approaches and use other approaches such as brand popularity, owning strategic assets, high volume production, customers support services and owning convertible financial instruments.