Risk Management of a Micro Enterprise: A Case Study on a Small Restaurant in Johor, Malaysia

Purpose of the study: This study explores risks face by small and medium enterprises (SMES), in particular micro enterprises, and risk mitigation techniques used to manage the risks. The objectives of the study are to identify risks face by SMES, the impacts of the risks and mitigation techniques to manage the risks.
Methodology: The study uses a case study approach. The subject of investigation is a small restaurant in a fisherman village in Muar Johor. Data are collected using interviews and walk through observations. The data are analysed in four steps to determine risks, impacts and mitigations techniques. The first step is to analyse problems faced by the business and impacts of the problems. The second step is translating the problems into risks. The third step is analysing the impacts and translating the impacts to risk impacts. The fourth step is analysing the feedbacks to find techniques used by the owner to mitigate the problems. The mitigations techniques are considered as risk mitigation techniques. Main Findings: The study finds SMEs particularly micro enterprise faces the following risks: financial, operational, strategic, hazard, human comfort, succession, equipment failure and health. The risk impacts are reduction in revenues, increase in cost of business operation, and inability to expand the business and decrease income. The study finds, owners are aware
of risks face by the business and able to mitigate the risk. However, the study concludes that the owners do not have a formal and systematic risk management practice and relies on informal risk mitigations techniques.
Novelty of the study: This study demonstrates a structured and systematic process to identify risks faced by SMEs and risk mitigation techniques to manage the risks. The process can be replicated and applied to any SMEs businesses. This study contributes to enhance understanding on risk face by SMEs and risk management techniques use by business owners to mitigate the risks. The results can be use by policy makers and financial providers to develop their policies, directions, and guidelines to help SMEs to sustain and expand their businesses.