Optimising Financial Resilience And Analysing The Impact Of Specific Risk Exposures On Smes In Ghana

Abstract

The aim of the study is to assess the financial resilience and how certain risk exposures affect small and medium-sized enterprises in Ghana. The descriptive research design was utilized by the study. The study discovered that SMEs face credit and financial risks exposures as a result of clients default to pay for credit granted to them (clients), and inability of SMEs to meet their financial obligations as a result of the financial risk exposure the encountered in the businesses. It was found that liquidity and market risks were not risk the SMEs face in Kumasi. The findings show a positive association between businesses that maintain enough savings in case of an emergency and the businesses dedicated to approval of cash before payment is made while it has negative correlation with business that has a cash forecast that is revised regularly. It was found that the SMEs use identification of potential internal and external risks, evaluation of possible effects of each identified risk, and ensure appropriate as well as timely integration of risk management practices within the day to day running of the company and general decision making process of the company. On the basis of the discoveries, the research outlined the following recommendations for policy direction. That management of SMEs should ensure to assess the ability to pay of clients before credits are granted in order to reduce credit defaults. That management of the SMEs should design strategies that enable them to save enough money to meet financial obligations at any point in time and design health and safety measures to ensure no unforeseen danger befall them. In addition, management of SMEs should build credit worthy record, invest in less risky ventures, and practicable risk management and mitigation policy that incorporate risk awareness or education and effectively communicate to every member of the SMEs to ensure risks are well managed.