An assessment of micro, small and medium enterprises (MSMES)’s risk management preparedness: a case of MSMES in Lusaka’s central business district.
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Date
2025
Authors
Lubasi, Amukena Joseph
Journal Title
Journal ISSN
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Publisher
The University of Zambia
Abstract
This study sought to investigate the risk management preparedness of Micro, Small and Medium Enterprises (MSMEs) in Lusaka’s Central Business District (LCBD), focusing on the strategies used and their effectiveness. Employing a cross-sectional, quantitative approach, data was collected from 385 MSMEs using structured questionnaires and a convenient sampling method. Cochran’s formula was used to determine the sample size. Descriptive statistics and regression analysis were applied to evaluate the relationship between risk management strategies and preparedness levels. Findings reveal that only 24 percent of MSMEs are adequately prepared for risks, indicating high vulnerability to operational and financial shocks, particularly from environmental, economic, or market disruptions. Among the four risk management strategies examined, risk avoidance was the most commonly used, followed by risk spreading. However, risk retention and risk transferring were less frequently adopted, raising concerns about overall preparedness. Regression results showed that all four strategies significantly influenced preparedness. Risk transferring had the strongest positive impact (β = 0.206, p = 0.000), indicating that MSMEs using insurance and risk-sharing mechanisms were 20.6 percent more likely to be prepared for disruptions. Risk avoidance (β = 0.152, p = 0.000) and risk spreading (β = 0.128, p = 0.005) also had significant positive associations, suggesting that minimizing exposure and diversifying operations contribute to resilience. Conversely, risk retention was negatively associated with preparedness (β = -0.091, p = 0.031), indicating that relying solely on internal resources reduces readiness for crises. The model demonstrated strong explanatory power, with an R-squared of 0.744 and an adjusted R-squared of 0.735, meaning 74.4 percent of the variation in preparedness could be explained by the four strategies. The model was statistically significant (F = 18.59, p = 0.000). These results have practical implications. MSME owners are encouraged to adopt diversified risk management approaches. Policymakers should develop programs promoting the adoption of various strategies and increase awareness of financial tools. Financial institutions are urged to design accessible insurance products tailored to MSME needs. Development partners should offer technical assistance, training, and capacity building to enhance MSME resilience. The study concludes that improving MSME preparedness in Lusaka’s CBD requires a holistic strategy combining risk avoidance, spreading, and transferring, while reducing reliance on risk retention. This integrated approach will enhance the ability of MSMEs to withstand external shocks and ensure their long-term sustainability.
Keywords: MSMEs; Risk Management Strategies; Risk Preparedness, Lusaka’s Central Business District
Description
Thesis of Master of Business Administration-Finance.