ENTERPRISE RISK MANAGEMENT: EVIDENCE FROM SMALL-MEDIUM ENTERPRISES

In today’s uncertain business environment, Micro, Small, and Medium Enterprises (MSMEs) play a vital role in economic growth, especially in developing countries like the Philippines. However, their limited access to management tools and resources makes them vulnerable to risks. This study examined the relationship between risk management practices and MSME competency, guided by the COSO Enterprise Risk Management (ERM) Framework (2013). It aimed to: (1) analyze MSME profiles (income, sector, assets, employees, years of operation); (2) assess the usage and effectiveness of risk management practices; (3) identify differences and relationships across business profiles; and (4) propose a practical risk management action plan. Findings showed that most MSMEs earn Php 9,000–35,000 monthly, have assets below Php 3 million, employ fewer than 10 workers, and operate mainly in wholesale/retail trade. Despite resource constraints, risk management—particularly in compliance, financial, and strategic areas—was rated “highly effective.” Significant differences emerged by income, assets, and years in operation, while correlation analysis revealed a strong positive link (r = 0.6102) between risk management effectiveness and overall competency. The study proposed a development plan including seminars on sustainable risk strategies, simplified loan processes, and digital promotion tools to strengthen MSME resilience and long-term sustainability. The research supports the UN Sustainable Development Goals (SDGs): SDG 8 (Decent Work and Economic Growth), SDG 9 (Industry, Innovation, and Infrastructure), SDG 11 (Sustainable Cities and Communities), and SDG 17 (Partnerships). Overall, it highlights the transformative role of integrated risk management in enhancing MSME performance, resilience, and competitiveness.

Companies in the 21st century face a complex business environment, full of opportunities, but pitted with the risks, in which they should make effective business decisions, improve interpersonal relations, meet societal obligations with the right strategy and manage risks. To overcome those challanges, the company needs management tools that can help the company to achieve its objective. Balanced Scorecard (BSC) dan COSO Enterprise Risk Management (ERM) Framework are management tools that are well -recognized and accepted among academicians and more importantly business leaders. They link the high level corporate strategies as determined by top level management with the day-to-day activities of the employees within the organization. Surprisingly, most of companies view BSC and COSO ERM as separate, unrelated management initiatives. In this article, we studies the feasibility of integrating BSC with the COSO ERM Framework, the framework for state-of-the art risk management, similiar to the way the BSC can be integrated with a variety of business management frameworks and methods. The integration of these two management tools (BSC and COSO ERM Framework) is a natural step in the evolution of corporate management . Keywords : Balanced Scorecard, COSO Enterprise Risk Management Framework, Strategic Management System, Risk Management, Key Performance Indicators, Key Risk Indicators.

Risk management in SMEs: A systematic literature review and future directions

The COVID-19 pandemic has had a devastating impact on many small and medium-sized businesses around the world. Enterprise risk management (ERM) is a conceptual framework that encompasses the systematic and comprehensive identification, analysis, and management of risks in an enterprise. In the post-communist countries of Central Europe, the level of ERM is still relatively low, especially in small and medium-sized enterprises (SMEs). This study fills a gap in the existing knowledge on ERM by shedding light on the influence of foreign capital on the level of ERM implementation in Czech SMEs. The aim of the study is to assess the influence of the share of foreign capital in Czech SMEs on the level of ERM implementation. A validated self-report of 296 non-financial SMEs in the Czech Republic was analyzed using latent class analysis (LCA) and multiple linear regression. The results of the study contribute to the literature by enriching the empirical analysis of ERM in emerging markets. The originality of the results lies in the identification of three distinct groups of firms according to the combination of implemented ERM elements—“no ERM”, “best practice ERM”, and “pretended ERM”—and the finding that the share of foreign capital, age, and firm size influence the level of ERM implementation. In particular, the positive influence of foreign capital in younger companies makes it possible to overcome the barrier of traditionalist thinking of old-school Czech managers influenced by the period of economic transition in post-communist countries. The paper builds on the existing evidence with new empirical conclusions and argues for a greater inflow of foreign direct investment into emerging markets.

The significance of the Enterprise Risk Management (ERM) is widely recognized by the academic and professional literature. Knowledge and management of business risks are an integral part of every successful business strategy and are increasingly becoming a primary factor of competitiveness. Although several risk management frameworks have been published and updated over time, these standards still have limitations. The advent of IT helped companies to better manage business risks. The rise of the IT governance has improved the management and the monitoring of business processes as well as the implementation of policies and procedures. The aim of this paper is twofold. First, a comparative analysis of the main risk management frameworks was carried out, highlighting their limits and weaknesses. Second, it was highlighted how the IT governance and the related frameworks as COBIT could contribute to a better implementation of the risk management process that allows to overcome the limitations of the examined standards.The significance of the Enterprise Risk Management (ERM) is widely recognized by the academic and professional literature. Knowledge and management of business risks are an integral part of every successful business strategy and are increasingly becoming a primary factor of competitiveness. Although several risk management frameworks have been published and updated over time, these standards still have limitations. The advent of IT helped companies to better manage business risks. The rise of the IT governance has improved the management and the monitoring of business processes as well as the implementation of policies and procedures. The aim of this paper is twofold. First, a comparative analysis of the main risk management frameworks was carried out, highlighting their limits and weaknesses. Second, it was highlighted how the IT governance and the related frameworks as COBIT could contribute to a better implementation of the risk management process that allows to overcome the limitations of the examined standards.

The growing risks of economic, societal, and environmental losses from disasters increase a need for a system to prevent, mitigate, or deal with disasters. However, past research revealed that there are few practical tools and systems available to manage the risk of disasters. This research is to apply an Enterprise Risk Management (ERM) framework to disaster risk management for preventing, assessing, mitigating, preparing, controlling, and monitoring disaster risks, and then to show a possibility to use a real-time ERM system to manage the disaster risks.

Purpose: This research examines the alignment between Prophet Yusuf's historical food security strategies and modern Enterprise Risk Management (ERM) frameworks to inform contemporary food security policies. Study Design/Methodology/Approach: A qualitative analysis of historical texts, including interpretations by scholars such as Al-Qurtubi (2008) and Al-Tabari (2009), was conducted to extract key components of Prophet Yusuf's strategies. These components were then compared with current ERM principles to assess their applicability in today's policy context. Findings: The analysis reveals that methods such as predictive risk assessment, strategic grain storage, sustainable resource management, waste reduction, and contingency planning closely mirror modern ERM practices. Integrating these historical strategies can enhance the resilience and effectiveness of current food security policies. Originality/Value: This study bridges historical analysis and modern risk management, offering a unique perspective on the relevance of ancient practices in addressing contemporary food security challenges. It provides actionable insights for policymakers seeking to incorporate proven strategies into modern frameworks, thereby strengthening national and regional food security resilience.

If in the past, the success of innovation was measured primarily in the economic sphere, recently the non-economic sphere has increasingly become more of a matter of corporate management and, therefore, of innovation management. Management’s acquisition of non-economic aspects has been strongly influenced by the vision of sustainable development. Sustainability is a direction of action important for innovation as well, integrating economic, social, and environmental responsibility in the management of innovation, leading to sustainability-oriented innovation (SOI). Research on SOI approached innovation processes has been carried out in large companies, however in recent years the use of TRIZ (teoriya resheniya izobretatelskikh zadach) tools has been tried for SOI. The TRIZ-based approach is a valuable tool because it does not require an encyclopedic knowledge of field-specific technology and it enables the expansion of the scope of problem solutions beyond the skills of the team members. This paper discusses the concepts of sustainability, innovation, and risk management in small and medium-sized enterprises (SMEs) for the purpose of developing a flow chart for the implementation of the TRIZ method in SMEs and for evaluating the state of innovation in such companies. Through the use of the TRIZ method in the field of SMEs, fast and efficient processes, products, and sustainable services have been obtained.

Small and Medium Enterprises (SMEs) face a significant challenge of knowledge loss due to their inability to implement Knowledge Risk Management (KRM) strategies effectively, which ultimately negatively affects their competitiveness and sustainability. The modern nature of work causes an over-reliance on technology to perform remote work, conduct organisational collaboration and exchange knowledge assets, which poses risks associated with knowledge exposure and loss for SMEs. Given that SMEs are resource constrained, they put little effort into risk management strategies that can potentially save them from losing their most critical knowledge. This study proposes a Resource-Based View framework (RBV) for SMEs to leverage internal resources and capabilities to mitigate the risks related to knowledge loss. A systematic literature review was conducted using the Preferred Reporting Items for Systematic Reviews and Meta-Analysis (PRISMA) to analyse academic publications from the past ten years (2014–2024) in order to identify key trends, challenges and strategies related to KRM, RBV and SMEs. Thematic analysis was applied to analyse the selected articles, with three themes emerging, namely the role of intellectual capital in mitigating knowledge risks; technological interventions for knowledge protection; and organizational culture’s impact on knowledge-sharing and security. SMEs struggle with managing intellectual capital, implementing technological interventions for knowledge retention, protection and sharing due to limited resources. Their approach to knowledge-sharing is unstructured and formal processes are less frequently implemented. However, organizations that integrate KRM effectively demonstrate greater resilience, sustainability and competitive advantage. The results underscore the need for SMEs to develop structured KRM frameworks aligned with their resource capabilities. This research bridges the gap between RBV and KRM, providing insights for SME managers to manage knowledge loss risks and enhance long-term sustainability. Future research should explore empirical case studies to validate the findings and proposed framework of this paper.

<p class="AbstractText">Micro, small and medium-sized enterprises (SMEs) are considered to be the engine of the European economy. In EU SMEs make up more than 99% of all companies and provide around 75 million jobs. They are a key source of job creation and stimulation of entrepreneurial spirit and innovation and are therefore essential for fostering competitiveness and maintaining employment in the EU. Yet SMEs often have problems in raising funds to finance fixed investments and inventory and working capital. SMEs mostly use internal sources while the most important external sources of SMEs are bank loans, which are not easily accessible. Hence, one of the priorities of the European Commission is stimulating SMEs through EU funds and programs in order to enable SMEs development and finally to contribute to economic growth. SMEs sector also dominates the economic structure of Croatian economy and they have similar financing problems. However, Croatia in period 2014 – 2020 have at disposal a total amount of 10.676 billion of euros from European structural and investment funds, of which 8.397 billion are aimed for cohesion policy objectives and 470 million euros are aimed for the development and competitiveness of SMEs. Besides, EU programs COSME and HORIZON 2020 are intended to provide direct support to SMEs and to create a favorable environment for their development. However, even though the number of successful project applications for small and medium-sized enterprises in the total share of Croatian project applications is relatively high, fund absorption has not reached satisfactory levels. Using the sample of Split-Dalmatia County’s SMEs, this study finds out reasons for low absorption capacity from SMEs point of view: SMEs are interested in funds from European Union, but are not sufficiently familiar with their availability i.e. funds at their disposal, especially programs COSME and HORIZON 2020; SMEs state that they know how to apply for EU funds but considered the procedure as complicated and demanding regarding documentation, and that the needed knowledge and know-how for proposal is beyond their scope; SMEs are not satisfied with the cooperation with state institutions, especially Ministry of Regional Development and EU funds and Croatian Chamber of Economy. We point out four main conclusions: (1) SMEs are not enough aware of EU financing possibilities; (2) additional promotion of EU programs directly to SMEs is required; (3) additional education of SMEs regarding project proposal and documentation is needed and (4) more proactive policy of state institutions and cooperation with local authorities is expected. Finally, greater awareness and professional help might be a key in strengthening the SMEs, whose entrepreneurial spirit and innovation process is a prerequisite for economic growth and development.</p>

Risk management in finance is an increasingly important area, which has been highlighted in the midst of the global credit crisis. In this paper, we propose a new risk management model for pension investment funds: a risk management framework and risk measure based on modelling the pension fund value as an option. We review risk management, discussing risk management frameworks and risk management measures. We discuss the advantages of our option-based risk management model and framework and conduct numerical experiments on our pension fund portfolio. We show that our risk management framework and model provides advantageous insight into managing pension funds.

The Securities and Exchange Commission's enhanced disclosure rule on risk oversight, state laws requiring public disclosure of compromised customer information, and high-profile customer information breaches have caused Information Technology (IT) risk management practices to be a major concern for boards of directors and management. The Committee of Sponsoring Organizations of the Treadway Commission's (COSO) Enterprise Risk Management (ERM) framework emphasizes the importance of the board's oversight role while also bringing attention to the firm's reporting structure. Consequently, our study examines whether the maturity of IT risk management practices depends on Chief Information Officer (CIO) reporting structure and Chief Executive Officer (CEO)/Chairman duality. We develop a scale to measure strategic and operational maturity under the larger auspice of IT risk management and distribute a survey to high-level IT professionals. Our survey also captures the reporting structure of their firms. Consistent with our hypothesis, we find that the maturity of strategic IT risk management practices are higher when the CIO reports directly to the CEO. However, contrary to expectations, we do not find that operational risk management is more mature when the CIO reports to the Chief Financial Officer (CFO). Instead, operational risk management is higher when the CIO reports to the CEO. For public firms, the maturity of IT risk management practices are higher when the CEO is also the chairman of the board of directors. As C-level officers may have asymmetric access to the board, understanding reporting structures may inform firms, regulators, and interested stakeholders on how well IT risk is managed and factors that affect IT governance.

The paper dealt with the importance of enterprise risk management to public sector organisations in Nigeria. The paper has reviewed literature on frameworks for enterprise risk management and established the global practice. The paper found that the practice of enterprise risk management is an evolving practice among public sector organisations globally. In Nigeria, it is mainly practiced in private sector organisations with inadequate levels of implementation in the public sector. The absence of a specific legal framework for the establishment of project and programme management practices in the public sector may be responsible. Based on available frameworks, practices, and benefits of enterprise risk management, the paper has recommended that public sector organisations establish enterprise risk management processes and cadres for project management officer, compliance and risk management officers. Keywords : Enterprise Risk Management, Public Sector, Risk Management, Nigeria DOI : 10.7176/PPAR/9-3-17 Publication date :March 31 st 2019

PURPOSE: The purpose of the present research note is to give an overview of research in the field of risk management in leasing SMEs as well as to present fields for future research. It intends to encourage other researchers to fill the current gap in research on risk management in general and on risk management in (German leasing) SMEs in particular. DESIGN/METHOD: The research note is based on interviews with 40 German leasing firms, thereof 35 SMEs. Qualitative research was chosen due to the nascent knowledge area and to explore cause-effect- -relationships as well as to gain a deeper understanding of the practical requirements on risk management. RESULTS/FINDINGS: A research framework was presented based on the findings of the literature review. Based on the interviews, the framework could be drilled down into more operative, leasing-specific topics. Amongst others, it could be found that the risk management organisation is greatly shaped by the underlying risk strategy, the motivation for risk management, as well as the essential risks. These three elements form the basis for the operative and strategic risk management practice. Furthermore, it was differentiated in the different lifecycle phases of risk management. ORIGINALITY/VALUE: The presented research note is based on the first known research in the field of risk management for German leasing SMEs with a comparable number of interviews. Therefore, this research note includes a high degree of novelty. Adapting the findings in practice as well as combining it with other research questions might add significant value to risk management research as well as practice not only limited to the German leasing industry. KEYWORDS: risk management, small and medium-sized enterprises (SMEs), leasing, financial services, Germany. JEL: A12, D81, G32

Industry 4.0 technologies, such as artificial intelligence, machine learning, and the Industrial Internet of Things (IIoT), are reshaping industries and hold considerable promise for advancing productivity and sustainable economic development. However, their adoption is fraught with risks, particularly for small and medium-sized enterprises (SMEs) that play a pivotal role in driving entrepreneurship, innovation, and the circular economy. Based on survey data collected between May and July 2020 from 307 professionals in mining, automotive manufacturing, and construction industries, this study examines critical risks across three stages of technology adoption: identification and selection; pilot testing, and full-scale implementation. Using the fuzzy analytical hierarchy process, the analysis reveals that technical risks dominate across stages and industries, while key social and environmental risks for achieving sustainability goals remain consistently deprioritized. However, risk profiles diverge by firm size and industry: SMEs are disproportionately affected by organizational and financial risks, whereas larger firms demonstrate consistent approaches through established risk management and economic policy frameworks. These findings demonstrate the necessity of a staged, context-sensitive, and sustainability-oriented adoption strategy. This study contributes to understanding how SMEs can balance economic efficiency and sustainable technology adoption in the transition toward Industry 4.0 by offering industry-specific propositions and managerial implications.