Implementing risk management practices across a vast majority of businesses is essential to navigating through uncertainties, making informed and efficient decisions, enhancing resilience and productivity, and ensuring smooth functioning of all business operations. In a recent article published on the World Economic Forum, CEO of the Institute of Risk Management- India Affiliate, Hersh Shah, discusses the importance of expanding risk management into all sectors of the economy, specifically within the Micro, Small, and Medium enterprises (MSMEs).
The article “Risk Management is for All Companies- Not Just the Giants” emphasizes the critical role MSMEs play in economies worldwide as they represent a vast majority of businesses (“90%”) and approximately half of the global GDP. Along with such a substantial economic representation, MSMEs act as crucial components in supporting larger industries and promoting social stability, constantly stimulating economies. The article draws attention to the fact that micro, small, and medium enterprises are a “diversified and resilient economic base”, making it significantly crucial for long-term stability and growth.
Demonstrating the importance of MSMEs, the article discusses how the “health and survival of MSMEs are intertwined with the nation’s economic vitality. Their failure could lead to massive job losses, reduced innovation, and a significant downturn in economic activity, causing systemic disruptions that could threaten wider economic systems.” The article provides insight on the necessity of developing Enterprise Risk Management processes to address the challenges and risks MSMEs experience in economies. Effective risk management helps combat such challenges which include the ongoing threats towards financial stability, long-term growth, and sustainable operations. Identifying and managing risk efficiently can further enhance the business’s reputation and build greater trust with stakeholders while simultaneously providing them with a competitive advantage which leads to a stronger market position. Risk management systems are an investment to not only help large companies but all types of enterprises to efficiently mitigate challenges and risks, foster forward-thinking capabilities, and achieve considerable results.
As challenges and uncertainties continue to grow, enforcing risk management becomes imperative for micro, small, and medium enterprises. With such paramount roles, it is highly advisable for the emerging organizations to incorporate and structure risk management processes to the specific needs and demands the MSMEs often experience. By establishing such frameworks, MSME leaders are able to minimize potential risks while achieving and maintaining growth and relationships needed to succeed within worldwide economies.
Read the original article here.
Lloyd Emerson Johnson is a results-oriented strategic advisor. With over 40 years of international, broad-based experience, Lloyd considers various disciplines in his approach to management and board governance. Through effectively evaluating all corners of a business, Lloyd Johnson has reinvented the roles of a strategic partner and stakeholder champion. He is a creative visionary who transforms businesses to be effective throughout all of their operations and finances. The pragmatic leader specializes in risk management and ensuring that businesses are prepared for uncertain circumstances.
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