Risk management practices in small and medium enterprises: Evidence from Sri Lanka

Over the years, risk management has been identified as a vital process in the business institutions. It is further believed that risk management is less developed within the small business sector where strong enterprise culture mitigates against managing risk in a professional structured way. This study focuses to investigate the risk management practices small and medium enterprises in Sri Lanka. The study was carried out by means of questionnaire survey by collecting data from 200 firms. The study uses descriptive statistics of mean and standard deviation and correlation analysis and ANOVA in the data analysis. The results show that the management of risk is strongly concentrated on owner managers and business planning system and link between the planning and risk management are not well developed in small and medium enterprises. The attitudes of the owner managers and their knowledge towards risks play an essential role in how systematically risks are handled. Therefore, this study stresses the need of improving current planning system within the SMEs together with enhancing the owner managers’ knowledge and awareness regarding risks management through proper training and development.