Risk management practices and the purchase of insurance by SMES

Abstract

The culture of risk aversion constrains the growth of the Small and Medium Enterprises (SME) sector among low-income entrepreneurs. They respond reactively to risk by using risk avoidance or by transferring the risk. The purpose of this study was to establish whether SMEs mitigate risk through the purchase of insurance. As well as to determine the influence of business size, level of education of the owner, Recovery Plan and the knowledge of insurance products on the purchase of insurance by the SME owner. A sample of 322 SMEs in the Nelson Mandela Metropolitan Area South Africa was selected and 203 questionnaires were returned. The results showed that SMEs do not to mitigate risk through the purchase of insurance. The size of the business, level of education, having a Recovery Plan and knowledge of insurance products had an influence on the purchasing of insurance by SME owners/managers for their business.

Risk Management Techniques and Insurance Buying Behaviour: Evidence From Small and Medium-Sized Enterprises in Lagos, Nigeria

“…Small and medium enterprises (SMEs) are being acknowledged as moving train that spur the necessary economic growth and development of every nation and the world (Ajemunigbohun, Isimoya, &Elegunde, 2020;Dayour, Adongo, &Kimbu, 2020;Ledwin& Watson, 2019). Observations from previous researches (such as Ayyagari, Demirguc-Kunt, & Maksimovic, 2011;Chodokufa, 2016;Ruchkina, Melnichuk, Frumina, & Mentel, 2017) agreed to the fact that not less than 95 percent of businesses were SMEs which are responsible for 60 percent private sector job chances. They iterated that the contributory proportion of SMEs in terms of businesses and job chances within African continent to stand nearly around 90 percent and 50 percent respectively.…”

“…Risk management is, by and large, something that does not require instantaneous attentiveness until some incidences occur (Moore, Pretty, Palich, & Longenecker, 2008as cited in Chodokufa&Chiliya, 2014. Studies (such as Chodokufa, 2016;Chodokufa&Chiliya, 2014;Dayour et al, 2020;Chatterjee &Wehrhah, 2017) had informed that prudent business owners are expected to take time to identify with the numerous types of risks encountered in their businesses and thus navigate means to respond and mitigate either its effects (impact) or size (severity). This, therefore, necessitate the need to carry out the study on the relationship between risk management techniques and insurance buying behaviour among SMEs in Lagos, Nigeria.…”

The Importance of Health Insurance in the Various Insurance Sectors in India: A Review

“…Insurance Regulatory and Development Authority (IRDA) to offer health claim related services for the benefit of both the insured and insurer. While the insured is benefited by quicker and better service, insurers are benefited by reduction in their administrative costs, fraudulent claims and control on claims (Sibindi, 2015;Chodokufa, 2016).…”

Investigation of Risks and Risk Management Practices in The Fast-Moving Consumer Goods Sector in Turkey with an Interview Study

“…Hence, companies ensure the continuity of their businesses in line with the goals they have set. The clarification of the risks that will have a positive or negative impact on the goals of the companies demonstrates another aspect of the risk concept (Pham et al, 2023;Chodokufa, 2016;Çobanoğlu and Sevil, 2013). Thus, it may be argued that risks are directly related with aims of organizations.…”