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A firm must manage risk in order to grow. However, the type of risk which is business wise manageable is a pure risk since they are insurable (Graham, 2014). Pure risks are classified into three major types, namely personal risks, property risks and liability risks (Graham, 2014). Out of the three, for developing countries’ small and medium enterprises, the area of property risk should be looked at closely. Since small and medium enterprises have a tendency of keeping large stocks, therefore this subject is of great interest due to the value of properties to the business (Fraser and Simkins, 2010). That means, for many small businesses, stocks of goods and business properties are a largest component of their assets/capitals.
According to Solomon (1982), property risk is a risk of the properties possessed by a firm or individual being damaged or lost. The sources of the damage or loss might be flood, earthquake, fire or theft. Also due to the fact that small and medium enterprises operate under low financial budget while the human capital needed is low, therefore personal and financial risks are not of interest compared to property risks (Graham, 2014).
Lots of research studies were done in an area of risk management of small and medium enterprises (SMEs) for instance Maria and Hiebel (2015), Henschel (2008), Henschel (2006), Sifumba, Mothibi, Ezeonwuka, Qeke, and Matsoso (2017), Zoghi (2017), Samugwede and Masiyiwa (2014), Sunjka and Emwanu (2015). The research about risk management in SMEs was done by Maria and Hiebl (2015).
Also, evaluating and implementing effective risk management systems was done by Henschel (2008). Moreover, Henschel (2006) conducted a research on risk management practices in German SMEs. Sifumba et al., (2017) did a study about the risk management practices in the manufacturing SMEs in Cape Town. Zoghi F. S. (2017) performed a research on Risk Management Practices and SMEs: An empirical study on Turkish SMEs.
Also, Samugwede and Masiyiwa (2014) did research on evaluation of risk management practices in SMEs in the manufacturing sector of Gweru, Zimbabwe. Finally, Sunjka and Emwanu (2015) researched risk management in manufacturing SMEs in South Africa. Since the risk management field is not very popular in Tanzania, so the researches done on risk management are satisfying but not enough. There is a lack of enough literature on SME risk management in Tanzania. Therefore, this research will analyse the risk management practices of small and medium enterprises in Tanzania.
Statement of the Problem
Small and medium enterprises are exposed to various property risks in their everyday course of business. However, property risk is somehow neglected in the field of small and medium enterprises (SMEs) regardless of its importance. Careful business owners and managers do manage the property risks of their businesses. By doing so, they become on the safe side while conducting business and be assured that gaining profit is not accidental.
A deserved attention is needed to be given about the current practices of property risk management. To do that importance is to be given to the awareness of the risk management to the owners and managers of the small and medium enterprises. Also understanding of the risks faced and techniques they use to manage those risks needs to be established. Therefore, this study will assess the property risk management practices of SMEs in Tanzania. This research’s analysis is based on the methods used to do property risk management by retail shops in Kinondoni Municipal in Dar es Salaam city.
Objectives of the Study
General Objective
In general, the research attempts to understand the property risk management practices of the small and medium enterprises (SMEs) in Tanzania. Specifically, the study aims at achieving the following objectives;
i. To evaluate the awareness of risk management among the SMEs in Tanzania.
ii. To understand main property risks faced by SMEs in Tanzania.
iii. To understand risk management techniques of SMEs in Tanzania.
Research Questions
i. What is the awareness level of risk management among the SMEs in Tanzania?
ii. What are the main property risks faced by SMEs in Tanzania?
iii. What are the risk management techniques of SMEs in Tanzania?
The Rationale of the Study
This research is significant in three ways. Firstly, it is a necessity for the researcher’s fulfilment of the requirements in completion of his Bachelor of Business Administration (BBA). Secondly, this study will add to the body of knowledge about the risk management practices of small and medium enterprises in Tanzania. Thirdly, the study will expose risks faced by and methods of risk management by SMEs, which is important information to policy makers working for the progress of the small and medium enterprises in Tanzania.
The Scope of the study
This study will cover retail shops in Kinondoni Municipal, Dar es Salaam as a representative of SMEs’ in Tanzania. This is because retailers make over 60% of SMEs in Tanzania, hence, employing in that proportion of the total SME employment. This study will cover a small geographical area due to lack of enough financial resources and limited time that could expand its scope beyond Dar es Salaam.

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