Effect of Risk Assessment Practices on the Financial Performance of Small and Medium Scale Enterprises (SMES) in Anambra State

Abstract

The study sought to ascertain the influence of risk assessment procedures on the financial performance of Anambra State's small and medium-sized companies (SMEs). Two research questions were developed, and one hypothesis was evaluated at a 0.05 level of significance. A correlational design was used in the study. The study's population included 2,895 managers of SMEs in Anambra State. A stratified sampling strategy was used to pick the sample. Thirty percent of small and medium-sized entrepreneurs were picked at random from each stratum, yielding an 868-person sample size. Three experts validated the two questionnaires used to gather data. A pilot test was done on 20 managers of SMEs in Enugu State to examine the dependability of the instruments. The Cronbach Alpha reliability technique was used, and the total reliability coefficient for internal consistency was 0.82, suggesting that the study was reliable. The Cronbach Alpha reliability technique was used to assess the data for each instrument cluster, providing values of 0.78 and 0.85 for clusters 1 and 2, respectively. Pearson's Product Moment Correlation and Multiple Regression were used to analyze the data. According to the findings, risk identification and risk analysis have a beneficial impact on the financial performance of SMEs in Anambra State. Furthermore, a substantial association was discovered between risk assessment techniques and the financial success of the state's SMEs. Based on these findings, several recommendations were made, including the suggestion that top management of SMEs should develop a risk assessment framework tailored to their business size, type, and financial capacity.