Factors Influencing Risk Management Decisions of Small and Medium Scale Enterprises in Ghana

"Despite the dynamic role of small and medium-sized enterprises (SMEs) in Ghana’s development, managers of these enterprises face several risks in their businesses. The occurrence of these risks may have a disastrous effect on the entrepreneurs’ toiled effort for business success, if not managed. This research therefore seeks to study the factors that stimulate or prevent owners of SMEs in Ghana in taking risk management decisions. The probit results show that the demographic factors indicate positive influence on the likelihood of the managers to take risk management decisions. All the business-related demographic factors are significant at various levels and positive, apart from the obvious risk aversion. The estimated amount at risk, estimated cost of risk management and estimated total monthly income after tax are economic factors that all have a positive influence on risk management. The cost of risk management has a positive influence on managerial decisions with regard to risk management at a five percent level of significance. Results on government policies and tax indicate that these factors are perceived to negatively influence risk management by managers."