'Enterprise risk management' essential for survival and sustainable development of micro, small and medium enterprises

Abstract

The part that Micro, Small and Medium Enterprises (MSMEs) play, both in developed and developing countries, cannot be over emphasized and therefore their existence and survival is a matter of concern not only for the policy makers but also for the researchers. Large number of MSMEs die the same year that they are established. The current research was taken up to understand how MSMEs manage their risk and whether enterprise risk management is essential for survival and sustainable development of MSMEs. The objective of the research was to (1) understand the peculiar nature of the MSMEs which make them vulnerable, (2) explore the various risks confronted by MSMEs, (3) understand how the MSMEs manage their risk, (4) understand 'Enterprise Risk Management' and its components and (5) explore the relevance of 'Enterprise Risk Management' for the survival and sustainable development of MSMEs. The results show that MSMEs by virtue of their size, inadequate resources and restricted know-how generally confront wide-ranging risks. In MSMEs the management of risk is concentrated in the hands of the owner-managers and there are no systemic linkages between the planning and risk management. Therefore, this study stresses the need for integrating an effective enterprise risk management system with planning and administration within the MSMEs, to avoid fatal consequences.