Enterprise Risk Management in Small and Medium-Sized Enterprises
Summary
Enterprise Risk Management (ERM) in small and medium-sized enterprises (SMEs) encompasses a structured and continuous process for identifying, assessing, responding to and monitoring risks that may affect an organisation’s objectives. SMEs face unique challenges, including constrained financial and human resources, less formal governance structures and heightened exposure to market volatility. Despite these limitations, the adoption of ERM frameworks—such as adapted versions of COSO and ISO 31000—can enhance decision-making, strengthen resilience and support sustainable growth. Key components include establishing a risk-aware culture, defining a clear risk appetite, integrating risk analyses into strategic planning and deploying proportionate control measures. Practical applications range from digital risk-mapping tools to scenario planning for supply-chain disruptions and financial stress tests. Globally, SMEs contribute the majority of enterprises and employment, so effective ERM in this sector has broad economic and social significance. Recent advances emphasise the integration of ERM with performance metrics and innovation strategies, underscoring the importance of tailored, scalable approaches that reflect the diversity of sectors and regional contexts.
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Enterprise Risk Management in Small and Medium-Sized Enterprises publication trend
The graph below shows the total number of articles in enterprise risk management in small and medium-sized enterprises across all publications each year (not limited to Nature Index journals).
Technical terms
Enterprise Risk Management (ERM): A holistic and systematic approach to identifying, evaluating and addressing risks across an organisation to achieve strategic objectives.
Risk appetite: The level and type of risk an organisation is willing to accept in pursuit of its objectives, reflecting both quantitative thresholds and qualitative preferences.
Risk assessment: The systematic process of identifying potential events, analysing their likelihood and evaluating their potential impact on organisational goals.
Risk mitigation: The set of actions and controls implemented to reduce the likelihood or impact of adverse events.
Risk culture: The shared values, beliefs and norms that influence how individuals and teams perceive and manage risk within an organisation.
Small and medium-sized enterprises (SMEs): Businesses defined by national criteria for staff headcount or turnover, typically facing resource constraints but representing a significant share of economic activity.
References
- Exploring the link between risk management and performance of MSMEs: A bibliometric review. Journal of Economic Surveys (2024).
- The relationship between SME owner-manager characteristics and risk management strategies. Journal of Open Innovation: Technology, Market, and Complexity (2023).
- Administración del Riesgo Financiero en las Pymes de Ecuador. Revista Veritas de Difusão Científica (2024).
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