Family owned businesses must integrate professional management in their if they are to experience faster growth and mitigate risks associated with demise of vision bearers.

Addressing Business Daily-KPMG sponsored TOP100 Midsized Companies forum, Sanlam Kenya Group Chief Executive Mugo Kibati said companies planning expansion beyond their vision bearers must institutionalise management where all processes are managed via market research and not individual instincts.

Mr Kibati said trained management teams would also help firms to safeguard themselves against risks associated with businesses saying Small and Medium Enterpises could have lost about Sh50 billion last year based on claims volume filed under the general insurance class.

“For me, the volume of claims paid out is a good indicator of the level of risk exposure given than only 3 SME’s for every 10 tend to hold risk solutions,” he said adding that companies need to put in place comprehensive risk solutions to shield SME’s from emerging risks such as cybersecurity and cyberterrorism.

Need for risk management

He said the tough economic climate and scarce resources, demanded that SMEs embrace modern standards of management that combines risk mitigation and management solutions.

It was observed that many businesses ignored the need for risk management solutions adoption due to poor financial knowledge associated with self-made successful traders who assume they are know-alls.

“It’s a worrisome scenario to note that most SME’s do not have comprehensive risk and asset management solutions which leaves them heavily exposed to manageable risks,” Kibati noted, adding that, “sadly, SME businesses built on blood and sweat rarely recover from threats such as fire and burglary due to lack of risk coverage.”

He added that many entrepreneurs preferred to pay for third party insurance for their motor vehicles and public liability insurance covers for their properties saying this provided negligible relief to entrepreneurs.