This literature review examines the implementation of Enterprise Risk Management (ERM) frameworks within Small and Medium Enterprises (SMEs), emphasizing the distinctive challenges and advantages for these organizations. SMEs often encounter obstacles such as limited financial resources, informal business processes, and a lack of specialized risk management expertise, which can impede effective risk management. Despite these challenges, the adoption of ERM frameworks can offer significant benefits, including improved risk identification and mitigation, enhanced decision-making capabilities, better resource allocation, and increased stakeholder confidence. The review identifies notable research gaps, including a scarcity of SME-focused studies, a lack of longitudinal research, and insufficient exploration of industry-specific ERM practices. The literature reveals contradictions, particularly concerning the complexity of ERM frameworks like COSO and ISO 31000, underscoring the necessity for simplified and tailored models for SMEs. However, there is a consensus on the critical role of leadership commitment, organizational culture, and the integration of ERM into strategic planning for successful implementation. Practical recommendations for SMEs include fostering a risk-aware culture, securing leadership commitment, and leveraging technology to enhance risk management processes. This review aims to contribute to a deeper understanding of ERM practices in SMEs and offers practical recommendations to enhance their resilience, competitiveness, and long-term success in a dynamic business environment.
Ahmad, M. A., AboAlkhair, M., & Tork, M. (2023). Managers' perception and attitude toward financial risks associated with SMEs: Analytic hierarchy process approach. Journal of Risk and Financial Management, 16(2), 86. https://doi.org/10.3390/jrfm16020086
Afrifa, G. A., & Tingbani, I. (2018). Working capital management, cash flow, and SMEs’ performance. International Journal of Banking, Accounting and Finance, 9(1), 1-17. https://doi.org/10.1504/IJBAAF.2018.10010466
Anton, S. G., & Afloarei Nucu, A. E. (2020). Enterprise risk management: A literature review and agenda for future research. Journal of Risk and Financial Management, 13(11), 281. https://doi.org/10.3390/jrfm13110281
Bettanti, A., & Lanati, A. (2023). Enhancing enterprise risk management (ERM) practices through a risk-driven performance measurement system (PMS): Insights from a SME case study. https://doi.org/10.21203/rs.3.rs-2817956/v1
Crovini, C., Ossola, G., & Britzelmaier, B. (2021). How to reconsider risk management in SMEs? An advanced, reasoned and organised literature review. European Management Journal, 39(1), 118-134. https://doi.org/10.1016/j.emj.2020.11.002
Dafikpaku, E. (2011). The strategic implications of enterprise risk management: A framework. In 2011 ERM Symposium. Retrieved from https://www.soa.org/globalassets/assets/Files/resources/essays-monographs/mono-2011-m-as11-1-dafikpaku.pdf
Elgammal, A., Turetken, O., & Van den Heuvel, W. J. (2015). A systematic literature review on compliance requirements management of business processes. International Journal of System Assurance Engineering and Management, 6(1), 1-14. Retrieved from https://pure.tue.nl/ws/portalfiles/portal/90602425319447.pdf
Gordon, L. A., Loeb, M. P., & Tseng, C. Y. (2009). Enterprise risk management and firm performance: A contingency perspective. Journal of Accounting and Public Policy, 28(4), 301-327. https://doi.org/10.1016/j.jaccpubpol.2009.06.006
Haleem, A., Javaid, M., Singh, R. P., Suman, R., & Gonzalez, E. S. (2022). Understanding the adoption of industry 4.0 technologies in improving environmental sustainability. Sustainable Operations and Computers, 3, 203-217. https://doi.org/10.1016/j.susoc.2022.01.008
Haleem, A. M., Javaid, M. A., & Qadri, R. S. (2022). Understanding the role of digital technologies in education: A review. Sustainable Operations and Computers, 3, 275-285. https://doi.org/10.1016/j.susoc.2022.05.004
Harper, J. (2018). Best practices for proactive enterprise risk management: “Let the (big) data tell you”. KM World, 27(5), 19-21.
Herrinton, M. (2012). How mature is your risk management? Harvard Business Review. Retrieved from https://hbr.org/2012/06/how-mature-is-your-risk-manage
Hida, E. (2017). Global risk management survey, 10th edn. Deloitte University Press. Retrieved from https://www2.deloitte.com/content/dam/Deloitte/tr/Documents/risk/global-risk-management-survey-10th-ed.pdf
Hoyt, R. E., & Liebenberg, A. P. (2011). The value of enterprise risk management. Journal of Risk and Insurance, 78(4), 795-822. https://doi.org/10.1111/j.1539-6975.2011.01413.x
Institute of Internal Auditors. (2009). The role of internal auditing in enterprise-wide risk management. Retrieved from https://www.theiia.org/en/content/position-papers/2009/the-role-of-internal-auditing-in-enterprise-wide-risk-management/
Jiménez, A., Arrieta, Y., Nuñez, M. A., & Villanueva, E. (2024). Management of strategic risks for the sustainability of SMEs in the manufacturing sector in Antioquia. Sustainability, 16(5), 2094. https://doi.org/10.3390/su16052094
Jordan, A., Jorgensen, L., & Mitterhofer, H. (2013). Performing risk and the project: Risk maps as mediating instruments. Management Accounting Research, 24, 156-174. Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2344011
Javaid, M., Haleem, A., Singh, R. P., & Suman, R. (2022). Understanding the adoption of industry 4.0 technologies in improving environmental sustainability. Sustainable Operations and Computers, 3, 203-217. https://doi.org/10.1016/j.susoc.2022.01.008
Kamala-Chaoui, L. (2017). Unlocking the potential of SMEs for the SDGs. OECD Development Matters. Retrieved from https://oecd-development-matters.org/2017/10/04/unlocking-the-potential-of-smes-for-the-sdgs/
Kardoš, P., Dvorský, J., Afful, C. R., & Kloudova, J. (2023). Management of operational risk in the context of financial performance of SMEs. Systems, 11(8), 408. https://doi.org/10.3390/systems11080408
Kushnir, K., Mirmulstein, M. L., & Ramalho, R. (2010). Micro, small, and medium enterprises around the world: How many are there, and what affects the count. World Bank/IFC MSME Country Indicators Analysis Note. Washington, DC: World Bank. Retrieved from https://www.smefinanceforum.org/sites/default/files/analysis_note_2010.pdf
Liu, X., Li, Y., Xi, H., & Yang, Y. (2023). Clarifying supply chain disruption and operational resilience. International Journal of Production Economics, 252, 108524. https://doi.org/10.1016/j.ijpe.2024.109314
Lundqvist, S. A. (2014). An exploratory study of enterprise risk management: Pillars of ERM. Journal of Accounting, Auditing and Finance, 29(3), 393-429. https://doi.org/10.1177/0148558X14535780
Md Rasel Ul Alam, A., Shohel, A., & Alam, M. (2024). Integrating enterprise risk management (ERM): Strategies, challenges, and organizational success. International Journal of Business and Economics, 1(2), 10-19. https://doi.org/10.62304/ijbm.v1i2.130
Ogutu, M., Juma, D., & Minja, D. (2018). Exploring the indirect links between enterprise risk management and the financial performance of SMEs. Risk Management, 20(4), 302-324. Retrieved from https://link.springer.com/article/10.1057/s41283-018-0040-2
Safari, A., Balicevac Al Ismail, V., Parast, M., Gölgeci, I., & Pokharel, S. (2024). Supply chain risk and resilience in startups, SMEs, and large enterprises: A systematic review and directions for research. International Journal of Logistics Management, 35(2), 680-709. https://doi.org/10.1108/IJLM-10-2022-0422
Safari, A., Balicevac Al Ismail, V., Parast, M., Gölgeci, I., & Pokharel, S. (2024). Trade-control compliance in SMEs: Do decision-makers and supply chain position make a difference? Journal of Business Ethics, 135(2), 680-709. https://doi.org/10.1108/IJLM-10-2022-0422
Tan, C., & Lee, S. Z. (2022). Adoption of enterprise risk management (ERM) in small and medium-sized enterprises: Evidence from Malaysia. Journal of Accounting & Organizational Change, 18(1), 100-131. https://doi.org/10.1108/JAOC-11-2020-0181
Venugopal, C., & Suryaprakasa Rao, K. (2011). Learning from a failed ERP implementation: A case study research. International Journal of Managing Projects in Business, 4(4), 596-615. https://doi.org/10.1108/17538371111164038
World Bank. (2021). Micro, small, and medium enterprises: Economic indicators. World Bank. Retrieved from https://documents1.worldbank.org/curated/en/873301627470308867/pdf/Micro-Small-and-Medium-Enterprises-Economic-Indicators-MSME-EI-Analysis-Note.pdf
Ahmad, S. A., & Teo, P.-C. (2024). The Implementation of Enterprise Risk Management (ERM) Frameworks in Small and Medium Enterprises (SMES): A Literature Review. International Journal of Academic Research in Business and Social Sciences, 14(9), 290–307.
Copyright: © 2024 The Author(s)
Published by Knowledge Words Publications (www.kwpublications.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode
