THE IMPACT OF RISK ON THE FINANCIAL PERFORMANCE OF SMALL MEDIUM ENTERPRISES IN THE CONSTRUCTION INDUSTRY IN EASTERN CAPE, SOUTH AFRICA

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William Chiliya, Ellen Chenesai Rungani ORCID logo, Norman Chiliya ORCID logo, Christopher Tarisayi Chikandiwa ORCID logo

https://doi.org/10.22495/rgcv5i3c2art8

Abstract

Risk management has become the driving force for business success due to the everchanging business environment. The purpose of this study is to investigate the impact of the level of awareness and use of risk management techniques on the financial performance. The data was collected from 82 of Small Medium Enterprises (SMEs) owners/managers in the construction industry in Eastern Cape, South Africa. The results show that the level of awareness and use of risk management techniques have a significant impact on the financial performance of SMEs in the construction industry. The study recommends that the government, tertiary institutions, construction industry development board, and SME owners or managers in the construction industry should work together in improving the level of awareness and use of risk management techniques.

Keywords: Financial Performance, Risk Awareness, Risk Management Techniques, Small Medium Enterprises

How to cite this paper: Chiliya, W., Rungani, E. R., Chiliya, N., Chikandiwa, C. T. (2015). The impact of risk on the financial performance of small medium enterprises in the construction industry in Eastern Cape, South Africa. Risk governance & control: Financial markets & institutions, 5(3-2), 224-234. https://doi.org/10.22495/rgcv5i3c2art8