A Framework for Risk Management in Small Medium Enterprises in Developing Countries

Abstract

Failure to holistically manage risk in Small Medium Enterprises (SMEs) is one of the major causes of small businesses failure. To answer the research question as to what supports the adoption of Enterprise Risk Management (ERM) in SMEs, this research aims to analyse Risk Management (RM) in SMEs and develops a framework to facilitate the adoption of ERM. In achieving the primary objective, the research establishes for SMEs: the sources of information for RM; the importance of information governance in managing risk; the fundamentals of RM; and the pillars of RM. Previous research conducted on RM in SMEs reviewed the challenges of the successful implementation of ERM in SMEs and proposed different ways to address these challenges. The common ground reached by the research is that there is a need for the simplification of ERM in SMEs. We followed an interpretive philosophy with an inductive research approach and employed a qualitative methodological choice with a cross-sectional time horizon through data collection, employing a review of the scholarly literature, to, in the end, develop a conceptual Small Medium Enterprises Risk Management Framework (SMERMF). The limitation of the research is that the empirical part of the research has not been concluded yet. To present the results, that will be compared to the theory and conclude the research.