Abstract
Risk management is one of the prominent issues which are pivotal to the success of a business and may adversely affect profitability if not properly practised. Therefore, the main objective of this paper was to determine risk management practices in manufacturing SMEs in Cape Town. The research conducted was quantitative in nature and constituted the collection of data from 74 SME leaders, all of whom had to adhere to a list of strict delineation criteria. All data collected were thoroughly analyzed through means of descriptive statistics. From the findings made, it is clear that SMEs in the manufacturing sector do in fact understand risk management initiatives applicable to ‘manage’ their respective businesses towards sustainability, but not to a large extent. It was found that respondents are unaware of the elements which make risk management effective, which ultimately aids to the development of problems for SMEs. All employees, managers and owners must coordinate their efforts together to identify and manage organizational risks within their ambit to obtain total risk coverage, as well as provide assurance that these risks are effectively managed from a coordinated approach. Further studies may be carried out to identify measures that can be taken to improve the effectiveness of risk management practices in SMEs.
Highlights
Risk management is still not prevalent among SMEs, in the manufacturing sector; it is not new, it has recently become a growing subject in supply-chain management (Lavatre, Gunasekaran, & Spalanzani, 2012)
Even though from the above results there are some seemingly positive statistics, these statistics are only helping in masking the true deficiencies behind the use of risk management initiatives
It is evident that SME owners and managers in the manufacturing industry need to be educated regarding risk management initiatives, the majority of them are aware of the risk that may negatively affect their organizations
Summary
Risk management is still not prevalent among SMEs, in the manufacturing sector; it is not new, it has recently become a growing subject in supply-chain management (Lavatre, Gunasekaran, & Spalanzani, 2012). The ele- tion and management of potential events to proment of competition was found to be an im- vide reasonable assurance regarding the achievepeding economic factor for manufacturing SMEs ment of objectives (COSO, 2004) To achieve their full potential in terms of devel- the identification and evaluation of actual and poopment SMEs owner managers are so imported) at a much ‘cheaper’ rate from countries knowledgeable about their ventures, but are comsuch as China and India This dispensation makes monly not able to identify all the risk elements it extremely difficult for South African manufac- that have an impact on their business activities turing SMEs to develop appropriate strategies (Smit & Watkins, 2012). Cally by means of Excel and SPSS to serve as evidence for relevant findings of the research
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