Risk Management in Small and Medium Enterprises Chiara Crovini Risk Management in Small and Medium Enterprises G Giappichelli Editore First published 2019 by Routledge Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business and by G Giappichelli Editore Via Po 21, Torino – Italia © 2019 Chiara Crovini The right of Chiara Crovini to be identified as author of this work has been asserted by them in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988 All rights reserved No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data A catalogue record for this book has been requested ISBN: 978-0-367-22679-4 (hbk-Routledge) ISBN: 978-0-429-27631-6 (ebk-Routledge) Typeset in Simoncini Garamond by G Giappichelli Editore, Turin, Italy The manuscript has been subjected to the double blind peer review process prior to publication To Mum and Dad, for always supporting me CONTENTS page List of figures and tables Preface 11 Introduction 15 Theoretical background 21 1.1 1.2 1.3 1.4 Definition and characteristics of Small and Medium Enterprises (SMEs) Risk and uncertainty The risk management process: a brief state of the art The decision-making process within the business management The management of risks in SMEs 2.1 Types of risks in SMEs 2.1.1 Credit, financial and defaults risks 2.1.2 Supply chain risk 2.1.3 Cyber, IT and fraud risks 2.1.4 Growth and relational risks 2.1.5 Risks related to management and employees 2.1.6 Environmental risk 2.1.7 Operational risk 2.1.8 Information system (ERP) risk 2.1.9 Reputational risk 2.2 Risk management process in SME 2.2.1 Risk identification and assessment 2.2.2 Risk management 2.2.3 Risk analysis, measures, techniques and practices 2.2.4 Strategic implementation and control and exposure 2.3 Risk behaviour and attitude Knowledge risk management and risk culture 2.4 Project risk management and innovation management 21 24 30 38 45 46 46 48 49 51 52 52 53 54 55 55 55 56 58 60 61 63 Risk management in small and medium enterprises page Case study 3.1 Research methodology, sample selection and data source 3.2 General information about the companies 3.2.1 Company A 3.2.2 Company B 3.2.3 Company C 3.3 Managing risks in small and medium companies: a comparative analysis 3.3.1 Company A and Company B 3.3.2 Company C Key emerging issues 4.1 New perspectives in managing risks in SMEs 4.2 A holistic, systemic and integrated model for Small and Medium Enterprises: a practical suggestion 67 67 69 69 70 71 72 72 73 75 75 79 Summary and conclusion 83 References 87 LIST OF FIGURES AND TABLES page Figures Figure Figure Figure Figure Figure Figure Figure Figure Figure Risk definition 4.0 COSO Report components and their reciprocal connections The structure of ISO 31000:2016 The paradigm of the business management GOFER Model DECIDE Model The features of decision making in SMEs Clusters and sub-clusters of analysis Risk management and decision-making processes: a comparison Figure 10 Relationships between the internal environment and its components and the external environment Figure 11 RM-DM Model for small and medium enterprises 29 32 34 37 40 41 43 46 77 78 80 Tables Table Table Table Table SMEs in the Euro Area Main economic and financial data of Company A Main economic and financial data of Company B 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