The Influence of Operational and Financial Risk Mitigation Strategies in Enhancing the Survival of Small and Medium-Sized Entities in Zimbabwe’s Volatile Business Environment

https://doi.org/10.34047/MMR.2024.11201

Abstract

The business environment in Zimbabwe is highly volatile as witnessed by soaring inflation, exchange rate volatility and shortage of foreign currency. This study therefore, scrutinizes the effectiveness of the operational and financial risk mitigation strategies employed by small and medium-sized enterprises in Zimbabwe given the current unstable business environment. A survey of small and medium-sized enterprises in the Harare Central Business District was undertaken for data collection and quantitative data analysis was done, 162 responses from a sample of 260 were obtained and analyzed. Results of the study show a range of operational and financial mitigation strategies adopted by small and medium-sized enterprises in Harare, Zimbabwe. It is evident from the results that there is a significant correlation between effective risk management and survival of small and medium-sized enterprises in Harare, this is because small and medium-sized enterprises that make efforts to implement robust risk mitigation measures show a higher likelihood of survival as compared to those that are reluctant to implement effective risk mitigation strategies. Based on the research findings, several recommendations are drawn which can be insightful to small and medium-sized enterprises as follows: small and medium-sized enterprises  should strive to develop a holistic approach to risk management in order to curb the negative effects of operational and financial risks, this can be done through regular risk assessments, implementation of suitable risk mitigation measures, as well as designing robust and ongoing monitoring mechanisms; Small and medium-sized enterprises  can also consider collaborations with industry associations, financial institutions and academia who have access to expertise and resources for effective risk management. This study is of significance to policy makers who may consider formulating and providing support and incentives to enable small and medium-sized enterprises implement effective risk mitigation measures that can enhance their sustained survival.