Risk Management in Micro, Small and Medium Enterprises (MSMEs) in India: A Critical Appraisal

Abstract

Risk Management, a term often linked to major corporations as a corporate governance requirement, is a useful process that MSMEs can adopt to improve their chances of sustained and successful longevity. Over the years, risk management has been identified as a vital process in the business institutions. It is further believed that risk management is less developed within the small business sector where strong enterprise culture can only help in managing risk in a professional and structured way. This study focuses to investigate the risk management practices small and medium enterprises in India. The attitudes of the owner managers and their knowledge towards risks play an essential role in how systematically risks are handled. Therefore, this study stresses the need of improving current planning system within the MSMEs together with enhancing the owner managers' knowledge and awareness regarding risks management through proper training and development. Risk management highlights the fact that the survival of a business entity depends heavily on its capabilities to anticipate and prepare for the change rather than waiting for the change and then react to it. It should be clearly understood that the objective of risk management is not to prevent or prohibit taking risk, but to ensure that the risks are consciously taken with complete knowledge and clear understanding so that it can be measured to help in mitigation.

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