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Effective Risk Management for SMEs

Risk management plays a significant role in the success and growth of small and medium enterprises (SMEs). It involves identifying potential risks, both internal and external, assessing their likelihood and potential impact, and developing strategies to address them. The document outlines several key types of risks SMEs face, such as operational risks, financial risks, supply chain risks, and external risks from factors like government policies, economic conditions, natural disasters, and more. It emphasizes the importance of implementing, monitoring, and evaluating a comprehensive risk management plan for SMEs to mitigate threats and maximize opportunities.

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61 views17 pages

Effective Risk Management for SMEs

Risk management plays a significant role in the success and growth of small and medium enterprises (SMEs). It involves identifying potential risks, both internal and external, assessing their likelihood and potential impact, and developing strategies to address them. The document outlines several key types of risks SMEs face, such as operational risks, financial risks, supply chain risks, and external risks from factors like government policies, economic conditions, natural disasters, and more. It emphasizes the importance of implementing, monitoring, and evaluating a comprehensive risk management plan for SMEs to mitigate threats and maximize opportunities.

Uploaded by

supriya
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

Risk Management in SMEs

What is Risk Management


Risk affects all aspects of business activities. Risk
could be considered not only as a possible loss but also
as a possible gain.

So risk management practices and strategies play a


significant role in SMEs success and growth.

Risk management involves identifying risks and


predicting how probable they are and how serious they
might become. Dealing with identified risks and
deciding on what to do with them is a key issue in risk
management process.
Objective of Risk
Indentify the common warning signs of risk
for a small business Implement, monitor, and
evaluate a risk management plan for a small
business After completing this module, you will
be able to: Identify the common warning signs
of risk for a small business. Implement, monitor,
and evaluate a risk management plan for a small
business.
Types of Risk in SMEs
External Risk Internal Risk ( Direct Risk)
(Indirect Risk)
Cultural Risk Operational Risk
Technology Risk Purchasing-Production-Distribution
Government Risk Informational Technology
Economical Risk Organizational and Management
Risk
Ecological Disasters Company Structure, Management
Personnel (H. R) Risk
Financial Risk
Government Risk
• Policy as a Market Catalyst
• Political Stability and Political Culture
• Government Taxation and Spending
• Setting Interest Rates
• Regulations and Permits
Economic Risk
There is close relationship between business and
its economic Risk. Business obtains all its needed
inputs from the economic Risk and it absorbs
the output of SMEs.
1.Inflation and Deflation
2.Interest Rates
3.Interest Rates
4.Monetary and Fiscal policy
Ecological Disasters Risk

Disasters have shown significant impacts on all types of


business in both developed and developing countries.
Both direct and indirect impacts of natural disasters are
devastating to business activities and their continuity.
MSMEs are more vulnerable to natural hazards than
large firms due to the fact that MSMEs:
Capital
Logistic
Labour
Market
Internal Risk For SMEs
Supply Chain Risk
Supply Chain Risk Management

we discussed the influences that define


contemporary supply chain risk management and
the primary lines of defense against procurement
risks. In this second part, we will identify a
systematic method for third-party risk
management (TPRM), including the strategic use of
data and technology, as well as the role of the
various subject matter experts and stakeholders
responsible for mitigating risks in procurement
operations.
Organization The Risk Management Process.
 
Financial Risk

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