Chapter I

The problem

Background of the Study

A lot of business fails in many factors like lack of knowledge, little capital

or finance, ineffective business plans, poor customer service, personal use of

business funds and wrong location. According to Marc Davis (2021), there are

many different types of risks associated with running a business. One or more

of these possible threats can completely ruin a company, while others can

cause significant harm that is both expensive and time-consuming to

remediate.

In this study, researchers wanted to know why these factors has a huge

impact to success of business owners and why proper risk management is

really important in these factors. It is really significant to know the risk before

the success because business doesn’t only have a positive side but also the

negative side. No successful business has been success without a struggles,

problems and disasters. Risk management is an important process because it

empowers a business with the necessary tools so that it can adequately identify

and deal with potential risks. Once a risk has been identified, it is then easy to

mitigate it and Our business ventures encounter many risks that can affect their

survival and growth. As a result, it is important to understand the basic

principles of risk management and how they can be used to help mitigate the

effects of risks on business entities. (CFI, 2015 to 2022)

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 Business risk is the exposure a company or organization has to factor(s)

that will lower its profits or lead it to fail. Anything that threatens a company's

ability to achieve its financial goals is considered a business risk. There are

many factors that can converge to create business risk. Sometimes it is a

company's top leadership or management that creates situations where a

business may be exposed to a greater degree of risk. This study is also wants

to give an awareness and spread extra knowledge about having a proper risk

management while doing a business because if we have a proper risk

management we will prevent any big loss of money, time and effort.

Mary Juetten (2019) states that managing the risks that come with doing

business is not something that anyone especially appreciates. It would be

preferable to be free of them totally, allowing us to devote all of our time and

resources to more productive endeavors rather than preventative ones.

However, danger imposes itself on us regardless of our wishes, and dealing

with it becomes another one of the less-than-pleasing chores that

entrepreneurs must undertake.

Risk can be measured in a variety of ways by business owners and

investors. Another way to look at it is in terms of the amount of money that could

be lost if a problem occurs. Another factor to consider is the frequency with

which risk and loss can occur. Other risk metrics could include historical data,

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specific situations, and the impact on the client. All of these methods of

measuring risk can be useful for a company that is attempting to examine,

manage, or minimize potential hazards for themselves and their investors.

Managing the risks facing your small business helps increase the probability

you’ll achieve long-term growth and success. Learning and applying the steps

in the risk management process can help prepare your business for whatever

it may encounter.

Ask most successful entrepreneurs, and they’ll tell you their business success

was influenced by taking a risk at some point. Taking risks is the way to create

opportunity and progress. When an entrepreneur takes certain risks the

competition is not willing to take, they can become leaders in their field. Risk

taking shows a team that the entrepreneur is a true business visionary and

leader who believes in the potential reward on the other side. Risk-taking

enables and encourages innovation, which can be an important

product/service differentiator. Failed risks aren’t always negative. Sometimes,

they provide the most valuable business lessons an entrepreneur can learn.

Failure helps shape future business strategies and can eventually lead to

business growth. (Penn, 2020)

However, sometimes the cause of risk is external to a company. Because of this,

it is impossible for a company to completely shelter itself from risk. However,

there are ways to mitigate the overall risks associated with operating a

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business; most companies accomplish this through adopting a risk

management strategy. (Mansa, 2020)

All things considered, the researcher aims to monitoring the effectiveness of

business risk management approaches and controls, putting systems in place

to deal with the consequences methodically and also to identifying the risks

surrounding of the business activities. This study is intended to explore the

ability, capability, skills, knowledge, and strategies of every successful

business owner in Tayug, Pangasinan beyond the years they are running a

business. The findings could contribute to social change by contributing to

other business owners or to those people who wants to start their business.

Risk management has occupied an important place on the agenda of

practitioners, academics and the business community, despite its evident

failure in the recent financial crisis that originated from the USA with its

multiplier effect on the world economy (Huber & Scheytt, 2013). It has been

raised to the top agenda of the business world because it enhances

organizational performance and creates value for stockholders (Gates, Nicolas

& Walker, 2012; Hillson, 2002). Risk has two components, that is, uncertainty

and consequences. Some experts view risk in terms of its impact either positive

or negative on objectives. There are pure and speculative risks. Speculative

risks are those risks that provide an opportunity for gain or loss while pure risks

has to do with the chance of either loss or no loss but no gain (Geldenhuys,

2006). Recent literature suggests various antecedents or factors influencing risk

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management implementation in organizations (Daud, & Yazid, 2009). There are

many and varied definitions of risk (Shimpi, 2002). Risk involves the possibility

of hazards such as system failure due to human attitude like fraud inspired by

corruption or lack of financial control that could cause financial loss to the

organization. The types of risks that are faced by the firm in Tayug, Pangasinan

affect its performance include operational, product risk, input risk, tax risk,

legal risk and regulatory risk. The management activities of organizing,

coordinating, planning, controlling and directing have been an integral part of

risk management. The process of identifying, prioritizing and treating risks has

been a common practice among organizations . However, an integrated or

enterprise approach to the treatment of risk is now been practiced instead of

the traditional risk treatment (silo) or risk transfer through insurance or other

financial products (Meulbroek, 2002; Doherty, 2000).

Framework defines important risk management mechanisms, risk

management philosophies and concepts, and proposes a common risk

management language, and provides clear course and direction for risk

management process. The implementation of holistic risk management,

enterprise risk management (ERM), is believed to contribute significantly to

the successful performance of modern-day organizations that operate in an

increasingly volatile and dynamic environment. In an environment of scarce

resources and information uncertainty, ERM, risk culture, and strategic

planning is required to face an unstable business environment to achieve

organizational goals. Several conceptual and empirical studies have

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provided mixed evidence on the value relevance of ERM. Scholars have

also demonstrated that the effects of ERM on performance are contingent upon

certain contextual variables. Currently, the academic literature is silent on the

joint relationship of ERM, risk culture, strategic planning, and organizational

performance. The purpose of this study is to uncover this research gap by

analytically reviewing pertinent conceptual and empirical literature to

establish the possibility that the impact of ERM on organizational performance

is transmitted through risk culture and strategic planning (Kanu,2021).

The main objective of this study is to learn and to understand how the

businesses in Tayug, Pangasinan manage the risk in their businesses. Risk

management is an important tool or mechanism to effectively handle

uncertainty in business. Based on the extant literature the implementation of

risk management will improve performance and enhance shareholder value

by, identifying, evaluating, monitoring and controlling all risk that can hinder

the organization from achieving its set of goals.

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 Theoretical Frame work

This study is anchored in Alpha Staff. If you run a business, you understand that

risk management can be a huge burden for your company. Simply put, risk

management entails identifying, assessing and prioritizing risks. Once threats

in a company have been identified, assessed and prioritized, resources are

used to control and reduce the likelihood that the identified risk occurs. Some

of the most common risks businesses face include project failures, financial

market uncertainty, legal liabilities, natural disasters, cyber-attacks, regulatory

and legislative changes, departures of key personnel, and third-party liability

(2018) The influence a name can have on a business is massive. It is the first

point of reference that customers, competitors, and employees have to

understand how your company represents itself in the business world and

beyond, and is an essential part of your branding. (MCGUIRE, 2020) In the main

variables, It consist consist of The demographic profile of the respondents:

Name, Type of Business and Years of operations while in the moderator

variables is the Factors that affects the Business risk management: Procedure,

Source of risk, Business loss and Deviation. These two variables will support

each other to come up with an efficient result.

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Figure 2

• Procedures and the

implementation of
procedures to manage
a business risk.

• Deviations from
expectations that can
cause harm to a • Importance of Business
business. risk management.

• Risk management
• Business loss Strategy of a business.

• Determine the Sources

of risk

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Conceptual Framework

Illustrate the conceptual frame work of the study Business Risk

Management of Business Owner in Tayug Pangasinan. What is

the level of the response of the management to the business risk

management factors in terms of: Financial, Availability of

resources and Market trends. What activities or intervention

tools can be proposed in order to address the business risk

factor, Is there a significant relationship between the six factor of

business failure and the formula of business risk management

strategies is the input of the study. Distributing self-constructed

questionnaire via Google Forms, tabulation of responses and

statistical analysis of the tabulated responses and data

presentation is the process of the study, and Business Risk

Management of Business Owner in Tayug Pangasinan is the

output of the study.

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 Input
Process Output

1. What is the demographic profile of the

Distributing self-
respondents in terms of: Business Risk Management
constructed
a. Location of Business Owner in
questionnaire via
b. Type of business Tayug Pangasinan
Google Forms
c. Form of business organization
tabulation of
d. Years of Operations
responses and
2. What are the factors affecting Business
statistical analysis of
Risk Management of selected business
the tabulated
establishments as provide by the
responses and data
owners and its management in terms
presentation.
of:

a. Procedure

b. Source of risk

c. Business loss

d. Deviation

3. Is there a significant difference

between factors affecting Business risk

Management and the demographic

profile variable by the respondents?

4. What activities or interventions can be

proposed in order to manage the

business risk management?

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Statement of the Problem

This study aims to assess the business risk management of selected business

establishment of Tayug Pangasinan

Specifically, this study sought to answer the following questions:

1. What is the demographic profile of the respondents in terms of:

a. Location

b. Type of business

c. Form of business organization

d. Years of Operations

2. What are the factors affecting Business Risk Management of selected

business establishments as provide by the owners and its management in

terms of:

a. Procedure

b. Source of risk

c. Business loss

d. Deviation

3. Is there a significant difference between factors affecting Business risk

Management and the demographic profile variable by the respondents?

4. What activities or interventions can be proposed in order to manage the

business risk management?

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 Chapter II

DESIGN AND METHODOLOGY

Methodology

This Chapter presents the methods and procedures that the researchers used

during the study. It includes research design, population and locale of the study,

data gathering tools, data gathering procedures

and statistical treatment of data.

Research Design

This study used descriptive type of research. According to Calmorin (2010),

when the study is concerned with the current situation, the descriptive method

was utilized. A new truth must be discovered in order for the mission to be

successful. Providing facts on which scientific judgment can be founded, as

well as fundamental knowledge about the nature of objects and people, is of

great use to scientists and researchers. Additionally, the data descriptions in

this type of research are factually accurate and systematic. Throughout the

description, averages and other statistical calculations will be used often.

Descriptive research is about questions, study designs, and the analysis

of data that are all related to a single subject. It is a strictly observational

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 research method that doesn't change the variables. The data that has been

analyzed is kept and can be used for other search methods. In this way, a

descriptive research design serves as the foundation for more research after

it is done.

This study used quantitative research design to collect and gather

information by using a questionnaire to facilitate the interpretation of the data

acquired. Also, the respondents of this study were the business owners in

Tayug, Pangasinan.

Population and Locale of the study

The researchers will use a simple random sampling meaning the

researchers are going to select different business owners as their respondents

located in different municipalities specifically in Tayug, Natividad and San

Nicolas Pangasinan. The researchers will be going to select forty (40) different

business owners in the said municipalities.

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DATA GATHERING TOOLS

Data gathering tools in research is to minimize the risk of errors in decision-

making, it is important that accurate data is collected so that the researcher

does not make uninformed decisions. Data collection can save a researcher

time and funds that would otherwise be misspent without a deeper

understanding of the topic or subject matter. In this research, the researchers

aim to provide relevant study in connection with how one can be considered as

successful business in the industry in using their perception and how business

can be able to comply to lessen the risk. This study entitled “Business risk

management of business owner in Tayug, Pangasinan” will be using

questionnaire forms consisting of different questions that will highlight what the

nature of their business is and how they are managing their business

profitability well. The questionnaires will be distributed to different target

respondents depending on their availability to answer the questions and the

The most important aspect of questionnaires compiled by the researchers is

that the structured questionnaires are those in which there are definite,

concrete, and pre-determined questions. The questionnaire will consist of

scales that will range from 1-4, considering 4 is the highest number and 1 is the

lowest number. The researchers will also include yes or no types of

questionnaires for additional data gathering tools and will answer questions

that are relevant to the study itself. Questionnaires are popular research

methods because they offer a fast, efficient, and inexpensive means of

gathering substantial amounts of information from sizeable sample volumes.

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These tools are particularly effective for measuring subject behavior,

preferences, intentions, attitudes, and opinions.

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Data Gathering Procedure

The researchers requested permission from the Dean of the College of Business

and Management Education to conduct the research. After the approval, the

researchers sought for experts to validate the questionnaire made specifically

for the study. After the validation and approval of the questionnaire, the

researchers asked permission from the management or owners of different

businesses through letter, to conduct the study within the company premises.

Once approved, the researchers will carry on with the survey and disseminate

the questionnaires to the specified respondents, explain the purpose of

answering the questionnaires and religiously guided them throughout the

process. The questionnaires were retrieved the same day it was administered.

Process shown in figure number 2.

REQUEST VALIDATION PERMISSION TO

PERMISSION CONDUCT SURVEY

RETRIEVAL OF ADMINISTER
QUESTIONNAIRES QUESTIONNAIRES

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Statistical Treatment of Data

The researchers will use statistical treatment to divide the gathered data for an

easy analysis and interpretation.

The problem will going to interpret by using Average Weighted Mean (AWM)

in which each observation in the data set is assigned by a weight before

totalizing to a single average value. In this procedure, each quantity to be

averaged is assigned a weight that determines the relative importance of each

quantity.

Determining to what extent the effectiveness of Risk Management of Businesses

in Tayug, Pangasinan. The researchers used weighted mean (WM) and will

interpret by the following criteria:

Table 1. Criteria in the Risks encountered by Businesses

Numerical Rating Range Mean Descriptive

Equivalence

4 3.25 – 4.00 Strongly Agree

3 2.50 – 3.24 Agree

2 1.75 – 2.49 Disagree

1 1.00 – 1.74 Strongly Disagree

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Questionnaire

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