Abstract: In today’s unpredictable and competitive business environment, managing risks effectively is vital for the long-term sustainability and growth of small and medium-sized enterprises (SMEs). This study focuses on understanding how SMEs, particularly in Chennai, identify, assess, and mitigate various forms of business risk, including financial, operational, regulatory, and environmental threats. With limited resources and increasing exposure to market volatility, SMEs must adopt structured risk management practices that align with their strategic goals.

This research explores key components of business risk management, such as risk identification methods, prioritization using risk assessment tools, and implementation of mitigation strategies like avoidance, transfer, reduction, and acceptance. The study further examines how SMEs develop adaptive strategies to cope with challenges in supply chains, labour markets, and changing regulatory landscapes. Using primary data collected through surveys from 100 SMEs in Chennai and supported by secondary research, the analysis employs percentage methods and chi-square tests to identify patterns and significant associations among risk management practices and business outcomes.

The findings highlight the importance of regular risk evaluation, proactive planning, and organizational culture in building resilience. Moreover, the research identifies gaps in risk diversification beyond financial aspects and emphasizes the value of integrating sustainability and ethical practices into risk frameworks. This study contributes to a better understanding of risk management in the SME sector and provides practical insights for business owners and policymakers aiming to strengthen risk readiness and promote stable, responsible growth in a rapidly evolving business environment.

Keywords: Business Risk Management, Small and Medium Enterprises (SMEs), Risk Mitigation Strategies, Operational Resilience, Regulatory Challenges, Sustainable Business Practices.

| DOI: 10.17148/IARJSET.2025.12481