A literature review of small and medium enterprises (SME) risk management practices in South Africa

Abstract

The inherent characteristics of small and medium enterprises (SMEs) afford these enterprises the potential to absorb unskilled labour and to nurture and develop entrepreneurial skills. However, in the South African economy, these benefits are not forthcoming due to the high failure rate of SMEs. The impediments to SME success includes numerous and varied obstacles. Studies conducted confirmed SME owner-managers ignorant pertaining to the risks their enterprise face with risk management techniques deployed reactively and ineffectively. By embedding a structured approach to enterprise risk management within SMEs, potential benefits such as reducing the over-management of risks and organisational alignment towards the SME’s vision can be realised. Key words: Small and medium enterprises (SMEs), risk, risk management, strategic risk management.