Risk Management Techniques and Insurance Buying Behaviour: Evidence from Small and Medium-Sized Enterprises in Lagos, Nigeria


  • Sunday Ajemunigbohun Lagos State University, Ojo, Lagos State


risk identification techniques, risk assessment techniques, risk control techniques, insurance buying behaviour, SMEs


Risk management techniques are important metrics in safeguarding the lives and property of mankind. They influence the behavioural attitude of people to perceive the image of insurance as an intangible, inseparable, variable, and transferable product. Therefore, this study aimed at assessing the effects of risk management techniques on insurance buying behaviour, with specific reference to the perceptions of selected SMEs in Lagos, Nigeria. The study adopted a cross- sectional survey research design. The study population consisted of the total number of registered SMEs recorded in Lagos State at 11,666. Thus, a single-stage cluster sampling technique was employed in the questionnaire distribution and data collection processes. Two hundred and forty-three (243) respondents were used in the study. The statistical technique employed was simple regression. This study confirms the importance of risk management techniques in the behavioural evaluation of insurance purchases in Lagos, Nigeria. It is recommended that insurance providers in Nigeria should attempt to tailor insurance products in a lovable and affordable manner to SMEs’ operators/owners in a bid to improve on their behavioural risk attitudes. More so, interest should be placed on impressive risk management communication and ideal risk financing techniques among SMEs’ owners/operators.


Abotsi, A.K., Dake, G.Y., & Agyepong, R.A. (2014). Factors influencing risk management decision of small and medium scale enterprise in Ghana. Ghana: Vizja Press & IT.\
Adeleke, I., Olowokudejo, F., Ajemunigbohun, S. (2016). Hazard perception and demand for insurance among selected motorcyclists in Lagos, Nigeria. The South East Asian Journal of Management, 10 (2), 121–140.
Adeyele, J.S., & Osemene, O.F. (2018). Small and medium enterprises’ risk exposure and mitigation approaches in Nigeria. The Journal of Entrepreneurial Finance, 20 (1), 21-42.
Afolabi, T.S. & James, J.T. (2018). Risk management and performance of small and medium enterprises in Osun State, Nigeria. Archives of Business Research, 6 (12), 157-163.
Ajay, S., & Masuku, M.B. (2014). Sampling techniques and determination of sample size in applied statistics research: An overview. International Journal of Economics, Commerce, and Management, 2 (1), 1-22.
Ajemunigbohun, S.S., & Adeoye, A.O. (2018). Insurance awareness and acceptance: Empirical evidence among small and medium-sized enterprises in Lagos State, Nigeria. Trends Economics and Management, 32 (2), 9-20.
Ajemunigbohun, S.S., Isimoya, O.A., & Elegunde, A.F. (2020). Risk attitude, insurance patronage, and SMEs performance: Empirical evidence from Lagos, Nigeria. Annals of ‘Dunarea de Jos’ University of Galati, 26 (2), 70-78.
Al-Qubtan, T.R., Gan, P., Abd. Hadi, F.S., Abdul Jalil, N., & Rambeli, N. (2021). Practical risk management approaches among small and medium enterprises. TEM Journal, 10 (2), 996- 1004.
Ayyagari, M., Demirguc-Kunt, A., & Maksimovic, V. (2011). Small vs. young firm across the World: Contribution to employment, job creation and growth. Policy Research. Working Paper, 5631, World Bank: Washington, DC.
Beenstock, M., Dickson, G., & Khajurian, S. (1988). The relationship between property-liability insurance premiums and income: An international analysis. Journal of Risk and Insurance, 55 (2), 259–272.
Booth, W.C., Colomb, G.G., Williams, J.M., Bizup, J., & Fitzgerald, W.T. (2016). The craft of research. 4th ed. Chicago: The University of Chicago Press.
Chatterjee, A., & Wehrhahn, R. (2017, April). Insurance for micro, small and medium-sized enterprise. No. 78. ADR Brief.
Chodokufa, K. (2016). Risk management practices and the purchase of insurance by SMEs. Risk Governance & Control: Financial Markets & Institutions, 6 (3), 100-104.
Chodokufa, K., & Chiliya, N. (2014). The relationship between SMEs and insurance providers in Nelson Mandela Metropolitan Area, South Africa. Mediterranean Journal of Social Science, 5 (14), 84-96.
Chuthamas, C., Aminul, I., Thiyada, K., & Dayang, H.Y. (2011). Factors affecting business success of small and medium enterprise (SMEs) in Thailand. Asian Social Science, 7 (5), 180-190.
Clarke, D.J. (2016). A theory of rational demand for index insurance. American Economic Journal: Microeconomics, 8 (1), 283-306.
Cooper, D.R. & Schindler, P.S. (2014). Business research methods. 12th ed. New York: McGraw-Hill Irwin.
Creswell, J.W. & Creswell, D.J. (2018). Research design: Qualitative, quantitative, and mixed methods approaches. 5th ed. New Delhi: Sage Publications India Pvt Limited.
Dafikpaku, E. (2011). The strategic implications of enterprise risk management: A framework. ERM Symposium.
Dayour, F., Adongo, C.A., & Kimbu, A.N. (2020). Insurance uptake among small and medium- sized tourism and hospitality enterprises in a resource-scarce environment. Tourism Management Perspective, 34,1-13.
Du, X., Feng, H., & Hennessy, D.A. (2014). Rationality of choices in subsidised crop insurance markets. American Journal of Agricultural Economics, 99 (3), 732-756.
Dupre, A (2009). Linking risk management to the budgeting process. CMA Management, August/September, 17-18.
Ekwere, N. (2016). Framework of effective risk management in small and medium enterprise (SMEs): A literature review. Nomor, 1, 23-46.
Gates, S., Nicolas, J., & Walker, P.L. (2012). Enterprise risk management: A process for enhanced management and improved performance. Management Accounting Quarterly, 13 (3), 28- 38.
Gatzert, N., & Martin, M. (2013). Determinants and value of enterprise risk management: Empirical evidence from the literature, Working Paper, Friedrich-Alexander University (FAU), Erlangen-Numberg.
Gray, D.E. (2017). Doing research in the business world. New Delhi: Sage Publications Asia- Pacific Pte Limited.
Grondys, K., Slusarczyk, O., Hussain, H.I., & Androniceanu, A. (2021). Risk assessment of the SME sector operations during the Covid-19 pandemic. International Journal of Environmental Research and Public Health, 18, 1-19.
Gwangwava, E., Manuere, F., Kudakwashe, G., Tough, C., & Rangarirai, F. (2014). An assessment of risk management practices in SMEs in Zimbabwe: A review and synthesis. IOSA Journal of Humanities and Social Science, 19 (8), 6-14.
Hagos, H.A., Kebede, E.Y., & Shewakena, B. (2019). Demand for life insurance and its determinants at household level: Evidence from Dire Dawa City. Research Journal of Finance and Accounting, 10 (17), 51-66.
Hoyt, R.E., Liebenberg, A.P. (2011). The value of enterprise risk management. Journal of Risk and Insurance, 78 (4), 795-822.
Ibiwoye, A., Mojekwu, J., & Dansu, F. (2020). Enterprise risk management practices and survival of small and medium scale enterprises in Nigeria. Studies in Business and Economics, 15 (1), 68-82.
Jenya, B., & Sandada, M. (2017). Enhancing success of SMEs through risk enterprise management: Evidence from a developing country. Pakistan Journal of Applied Economics, 27 (2), 173-188.
Kehinde, A., Opeyemi, A., Benjamin, A., Adebayo, O., & Abel, O.A. (2017). Enterprise risk management and the survival of small business in Nigeria. International Journal of Accounting Research, 5 (12), 1-8.
Kothari, C. & Garg, G. (2016). Research methodology: Methods and techniques. 3rd ed. New Delhi: New Age International (P) Limited.
Krummaker, S. (2019). Firm’s demand for insurance: An explorative approach. The American Risk and Insurance Association, 22, 279-301.
Kunreuther, H., & Pauly, M. (2005). Insurance decision-making and market behavior. Foundation and Trends in Microeconomics, 1(2), 63–127.
Ledwin, C., & Watson, M. (2019). Risk attitude, risk perception, and risk management strategies adoption in Zimbabwean small and medium enterprises. Journal of Management and Economic Studies, 1 (2), 53-68.
Lima, P.F., & Verbano, C. (2019). Project risk management implementation in SMEs: A case study from Italy. Journal of Technology, Management, and Innovation, 14 (1), 3-10.
Mayer, H. (2017). Political risk insurance and its effectiveness in supporting private sector investment in fragile states. UK: University of Oxford.
Meko, M., Lemie, K., & Worku, A. (2018). Determinants of Life insurance demand in Ethiopia. Journal of Economics, Business, and Accountancy Ventura, 21 (3), 293-301.
Mensah, S. (2004). A review of SMEs financing schemes. UNIDO Regional Workshop of Financing Small and Medium Scale Enterprise.
Neneh, N.B., & Van Zly, J.H. (2012). Achieving optimal business performance through business practices: Evidence from SMEs in selected areas in South Africa. Southern African Business Review, 16 (3), 118-144.
Obalola, M.A., & Ajemunigbohun, S.S. (2017). An analytical study of business risk management among selected small and medium enterprises in Lagos State, Nigeria. LASU Journal of Business Review, 4 (1), 35-46.
Obi, I.V., Okoronkwo, I.L., Iloh, G.U.P., Nwonwu, E.U., Ogbu, K., & Yakubu, A.A. (2020). Critical determinants of demand for services in the Nigeria formal sector social health insurance programme. International Journal of Health Economics and Policy, 5 (1), 1-8.
Olowokudejo, F.F., & Nwankwo, S.I. (2016). Business risk management and organizational performance: Empirical evidence from small and medium enterprise (SMEs) in Nigeria. Economics and Management, 1, 32-41.
Olsson, C. (2002). Risk Management in emerging markets: How to survive and prosper. Great Britain: Pearson Education Limited.
Pagach, D., & Warr, R. (2010). The effects of enterprise risk management on firm performance, Working Paper, North Carolina State University, Raleigh.
Peter, F.O., Adegbuyi, O., Olokundun, M.A., Peter, A.O., Amaihian, A.B., & Ibidunmi, S.A. (2018). Government support and financial performance of SMEs. Academy of Strategic Management Journal, 17 (3), 1-10.
Pradana, M., & Bandula, J. (2012). Risk management practices in small and medium enterprise: Evidence from Sri Lanka. International Journal of Multidisciplinary Research, 2 (7), 226- 234.
Rao, A., & Marie, A. (2007). Current practices of enterprise risk management in Dubai. Management Accounting Quarterly, 8 (3), 10-22.
Richter, A., Schiller, J., & Schlesinger, H. (2014). Behavioural insurance: Theory and experiments, Journal of Risk and Uncertainty, 48, 85-96.
Scott, J. (2000). Rational choice theory. In G. Browning, A. Halcli, & F. Webster (Eds.), Understanding contemporary society: Theories of the present (pp. 126-138). London: Sage Publications.
Turner, J.S. (2010). Business risk and the tradeoff theory of capital structure: Predicting the use of term debt in the healthcare sector. A dissertation submitted in partial fulfillment of Doctor of Philosophy. University of Michigan.
Waheed, A., & Ullah, K.S. (2017). Determinants of Takaful and conventional insurance demand: A regional analysis. Cogent Economics and Finance, 5 (1), 1-18.
Wang, Y., Li, B., Li, G., Zhu, X., & Li, J. (2019). Risk factors identification and evolution analysis from textual risk disclosures for insurance industry. Procedia Computer Science, 162, 25- 32.
Wilson, J. (2014). Essential of business research: A guide to doing your research project. 2nd ed. London: Sage Publication Limited.
Zoghi, F.S. (2017). Risk management practice and SMEs: An empirical study on Turkish SMEs. International Journal of Trade, Economics and Finance, 8 (2), 123-127.






Business Administration and Business Economics