Measurement and Metrics". Another simple example appears by virtue of our day-to-day expectations.
For example, we expect to arrive on time to a particular destination. A variety of obstacles may stop us from actually arriving on time. The obstacles may be within our own behavior or stand externally.
However, some uncertainty arises as to whether such an obstacle will happen, resulting in deviation from our previous expectation. As another example, when American Airlines had to ground all their MD-80 planes for government-required inspections, many of us had to cancel our travel plans and couldn’t attend important planned meetings and celebrations. Air travel always carries with it the possibility that we will be grounded, which gives rise to uncertainty. In fact, we experienced this negative event because it was externally imposed upon us. We thus experienced a loss because we deviated from our plans. Other deviations from expectations could include being in an accident rather than a fun outing. The possibility of lower-than-expected (negative) outcomes becomes central to the definition of risk, because so-called losses produce the negative quality associated with not knowing the future. We must then manage the negative consequences of the uncertain future. This is the essence of riskmanagement.
The managers of industrial agricultural enterprises often encounter specific problems in riskmanagement.
In Latvia, there is a new type of agricultural produc- tion risk that can be regarded as the risk of herd syn- drome, which has gained a persistent character. Media reports suggest that foreign subjects also purchase land in Latvia and establish agricultural enterprises. Generally they are large-scale entrepreneurs who see agricultural production as a high-priority industrial sector with large numbers of cattle and sizable sowing areas. Needless to say that such extensive production may also have a mate- rial impact on the environment, which becomes notice- able to the population of a respective area; and therefore gives rise to public disapprovals of the establishment of beef production enterprises or dairy farms. Such reaction of Latvian population is not difficult to understand, espe- cially if we bear in mind the historically absolute govern- ance of small-scale farming and the Latvian mentality.
xiii This text has taken almost two years to put together and the concept of enterprise riskmanagement (ERM) for small and medium-sized enterprises (SMEs) goes back even further with the inception of the Goldenson Center for Actuarial Research at the University of Connecticut in 2008 . While the idea for the text was originated by the work done at the Goldenson Center—the development of ERM for small busi- nesses into an integrated discipline through a series of ERM projects—it could not have been accomplished without the collective efforts of the contributing authors . Now that the book is completed, the effort has been well worth it .
inputs, tax and interest rates, labor costs, exchange rates, adverse effects of natural factors and so on. Result of these phenomena increased need for the development of financial instruments whose implementation could be used as a riskmanagement instruments. For this reason, in the last thirty years there has been a fast development of commodity derivative markets, which allows agricultural enterprises in developed market economies to use various hedging strategies. In this way, farmer’s risk of change in prices of agricultural products can be transferred on risk-taking speculators who expect to make a profit.
manager to identify risks and take the necessary steps to protect the firm against them. Small companies rarely have that luxury. Instead, the responsibility for riskmanagement is likely to fall on the small business owner. The Small business owner is any person or group of people that starts and runs a Small and Medium Scale Enterprises (SMEs). Small and Medium Scale Enterprises (SMEs) is any enterprise with a total capital employed of not less than N1.5 million, but not exceeding N 200 million ( including working capital but excluding cost of land ) and with the staff strength of not less than 10 and not more than 300 workers (Obamuyi, 2010; Azende 2012; Iorpev,2012). SMEs all over the world play important role in the process of industrialization, economic growth, and sustainable development of any economy (Ariyo, 2005). According to CBN (2011), SMEs are critical to the development of any economy, as they possess great potentials for employment generation, improvement of local technology, output diversification, development of indigenous entrepreneurship and forward integration with large-scale industries. Kpelai (2009) stressed that, SMEs are the engine room for economic growth. According to Azende (2012) SMEs may look small or inconsequential but are actually the foundation of any economically stable nation. The potential benefits of SMEs to any economy include contribution to the economy in terms of output of goods and services, creation of jobs at relatively low capital cost, provision of a vehicle for reducing income disparities, development of a pool of skilled and semi- skilled workers as a basis for future industrial expansion.
Finally considering the results of FS% and FC% and their significance level Hois substantiated:
Legal structure effect on foreign on transaction exposure riskmanagement
Discussion And Conclusion
The questionnaire testing showed that it is valid. The enterprises included in this research composed are manufacturing, commercial firms and other enterprises with other activities. The enterprises included in this research are mostly with limited liability followed by the enterprises with public shareholding. The variety of legal forms of companies included in this research was for the purpose to provide information about the behavior of these enterprises for the foreign exchange riskmanagement.
The implementation of Enterprise RiskManagement (ERM) is vital for all types of organisation including the small and medium enterprises (SMEs). Thus, the objective of this study was to examine perception of the ERM framework among SMEs in Malaysia, and to analyse its effect on sales performance. ERM is becoming an issue of high concern among organisations. This is because it is hailed as one of the most important framework to provide a clear direction and guidance in managing the risks of enterprises, so that the organisation is able to minimise risk and losses. In this study, a survey of one hundred and fifty-two (152) SMEs was conducted and the data was analysed using regression analysis. This study found that SMEs focus heavily on the “control environment” and “risk appetite” components. These two (2) components were ranked as the top ERM framework by SMEs in Malaysia. The Regression result suggests that “assessing riskmanagement”, “control activities”, “information and communication” and “monitoring” components proved to have a significant effect on sales. This paper further contributes to knowledge development on ErM framework and the influences of its components on sales performance from a dynamic capability perspective of SMEs. SMEs should primarily consider the influence of dynamic capabilities and changing resources in their organisations when practising ERM for its survival.
From this point of view, the perceived legitimacy of authorities disclosing information is another key issue in the adoption of the adapted risk behaviours by individuals (Ballantyne et al. 2000; Dahlstrom et al., 2012). Then, to compel the population to follow the authorities’ recom- mendations and to adopt the appropriate behaviours in case of a disaster, the information should take into account the level of legitimacy they get for the authorities in charge of riskmanagement (Cvetkovich 1999). The methods used in Social Sciences can then be useful in the understanding of behaviours and practices (Barberi et al. 2008; Bickerstaff 2004; Brilly and Polic 2005; Drori and Yuchtman-Yaar 2002; Drottz-Sjöberg 1993; Finlay and Fell 1997). They can be adapted to understand the attitudes for populations exposed to a major risk such as lahars. As other natural hazards such as volcanic eruptions, the con- sequences of lahars are unpredictable and are important both on the population and the infrastructures (Vargas Franco et al. 2010). In this context, the present contribu- tion focuses on the assessment of subjective judgement of individuals (living in risk-prone areas) on natural hazards and disaster, in order to answer the main question: how can we qualify the link between representation, information and behaviours? Three hypotheses will be tested: (1) the
Moreover, they must face high competition without the possibility of working on the margins and little chance of engaging in technological innovation (Raghavan, 2005).
SMEs face obstacles regarding riskmanagement implementation. It is well-known that, conversely to large listed companies, small firms lack the financial and human resources to specifically handle risks. A proper riskmanagement system requires adequate funds and enough resources and management attention. Moreover, SMEs are often characterized as lacking professionalism, infrastructure, and having an overdependence on one or two key persons. There are findings suggesting that SMEs have a less developed, formalized, and professionally structured riskmanagement system than large enterprises, but little research has actually focused on riskmanagement in SMEs.
School of Management & Business Studies (SMBS), Lagos State Polytechnic, Lagos Nigeria
ABSTRACT: The study advocated the adoption of Enterprise RiskManagement (ERM) by firms. Despite the benefits of ERM, few firms have adopted it in Nigeria. It identified factors that influence firms to adopt ERM, ERM implementation challenges and benefits of adopting ERM. It also recommended a suitable ERM framework for use in Nigeria. Using the literature, the study established that the understanding of ERM, its benefits, factors stimulating firms to adopt ERM, and ERM implementation challenges are necessary to promote the adoption of ERM in Nigeria. The outcomes of the study revealed that business enterprises in Nigeria have not understood and embraced ERM; thus, not widely adopted in Nigeria. The findings suggested that: the understanding of ERM is necessary to facilitate its adoption in Nigeria; ERM must start in the boardroom in order to positively influence the way firms’ thought about risk, and planned for eventualities; and firms should integrate riskmanagement into their organisation’s philosophy, practices, and business plans, rather than being viewed or practised as a separate programme. The government also need to provide suitable environment for businesses to thrive to ensure that the benefits of ERM are feasible in business enterprises and the economy.
Both institutes, SBDC and EEI, embody FIU’s passion for entrepreneurship and its commitment to the SMEs community. The Small Business Development Center, by providing South Florida’s entrepreneurs with a range of professional activities, such as business consulting and management training, plays a key role in dissem- inating vital information for small business owners and aspirant entrepreneurs to face the challenges of the global business environment, and build increasingly resil- ient operations against unforeseen events. The Extreme Events Institute sets a true example of FIU’s “Worlds Ahead’ spirit by leading research and applications in ex- treme events and developing cutting-edge knowledge in disaster resilience, includ- ing disaster riskmanagement, vulnerability reduction, preparedness, business con- tinuity, emergency response, and resilience. Together, these institutes make much more than a case for FIU’s experience with Small-and-Medium Sized Enterprises.
Small and Medium Enterprises (SMEs) in both developing and developed economies play crucial roles in economic development through wealth creation, employment opportunities and poverty alleviation. However, the uncertainties surrounding businesses require SMEs to effectively manage their risk exposures. This study examined the influence of riskmanagement practices on the performance of SMEs in Osun state, south-western Nigeria. A total of 340 SME operators in the state were chosen for this study and primary data were collected through a structured questionnaire which was administered to managers/operators of the selected SMEs. A total of 330 copies of the questionnaire were returned having been correctly filled and deemed suitable for this research. A linear regression model, through the Ordinary Least Squares technique was used for the data analysis and test for hypothesis, with the aid of the E-view statistical software. The result from the analysis revealed a significant relationship between riskmanagement and the performance of SMEs (t-value=23.47; p<0.05). The result further showed that attitude to risk positively affects riskmanagement practices and that there is a strong positive correlation between risk identification and riskmanagement (r=0.92). The study therefore concluded that riskmanagement practices have significant and positive influence on the performance of SMEs in Osun state. It was recommended that SME operators in Nigeria should put in place cost-effective measures for timely risk identification and effective risk mitigation in order to ensure that their financial performance is not negatively impacted.
Currently, a foreign private equity fund manager, who raises capital for private equity investments in China, usually, first sets up a wholly-foreign-owned or joint-venture management company in China, and then establishes a Limited Liability Partnership Enterprise with the management company as a general partner. With the implementation of the Measures, foreign enterprises and individuals may have the opportunity to directly establish a Limited Liability Partnership Enterprise in China and having a foreign management company as the general partner
According to the Merriam- Webster dictionary, a contingency is something (such as an emergency) that might happen.
Contingency planning might actually be the most critical aspect of your overall strategic plan .In any estimate or project plan the estimators always include an item at the end of the estimate for contingencies. A contingency allowance is necessary because uncertainty exists in the estimating data and assumptions. The costs cannot be defined precisely when the estimates are made. In most African countries and in particular Kenya, many SMEs rarely keep funds for contingencies. With their high mortality rate, there is need to establish whether this could be one of the effects of not planning for contingenties and also find out if contingency planning has helped reduce Operational Risk. Henschel (as cited in Tajudeen and Francis, 2013,p. 82) affirms that a riskmanagement System is necessary for SMEs because it is in the essential interest of the SME and that it will therefore help in the development of contingency plans to stop the erosion of organizational income and improve performance. Brahim (2013) opines that crisis management planning in the context of SMEs is less extensively researched despite a long established crisis management literature that only focuses on large enterprises hence the need to establish the same for SMEs.
The literature sources reviewed in this chapter will provide an understanding of social media risks in enterprises, the type of social media platforms used by employees and enterprises and the importance of social media riskmanagement practices and procedures. Social media is an evolving research area across different industries, which is due to the significant benefits and opportunities that the use of social media platforms have on enterprises. Today, “[p]articipating in Social Media has become an enterprise imperative. More than 70% of enterprises operating around the world are now active on Social Media. Many are finding significant benefits, as well as unexpected risks, along the way” (KPMG, 2012a:2). Moving away from traditional communication channels, modern enterprises are heavily reliant on information systems. Many small to large enterprises use social media platforms to perform various activities such as maintaining customer feedback on forums, Facebook pages, Twitter tweets, LinkedIn groups, blogging and even for creating social media footprints in relation to competitors in the market (Kim, 2012:1). Deloitte (2012a:8) summarises social media benefits and challenges as follows in Table 2.1.
Since this study looks into SMEs’ hedging strategy made by managers, which is partly and at times fully subjective, perceptual measures will be an appropriate method. As mentioned earlier, Ketokivi and Schroeder (2004) claim that objective measures are unlikely to be as appropriate as perceptual measures for those measures which concern the cognitions of individuals and organizations. Indeed, much of the riskmanagement literature discusses outcomes that exist in the cognitions of individuals and organizations. Conceptualizing organizational strategy, scholars (e.g., Ginsberg, 1984; Ginsberg & Venkatraman, 1985; Venkatraman & Grant, 1986) are concerned about measurement reliability and validity. To assess the reliability and validity of perceptual measures developed by Miles, Snow, Meyer, & Coleman Jr (1978), Shortell and Zajac (1990) have used both archival and perceptual data from two time periods and found that prediction using perceptual data is the same as prediction using archival data. In summary, on the basis of studying an overarching model of a firm’s forex riskmanagement (specifically, influences on hedging strategy), the use of perceptual measures in this study is an appropriate approach. First, perceptual measures aim to capture firms’ environment from the perspective of organizational members. Second, they are able to reflect the current state of the firm's environment. Third, perceptual indicators are preferred to financial ones as the latter is subject to accounting systems, the capital structure and a number of other factors. Fourth, informants are more likely to respond to perceptual questions than to disclose archival data. Fundamentally, this is a study about firms’ financial behaviours that are largely influenced by individual cognitions; hence the use of perceptual measures is the most appropriate option. In order to address potential limitations on using perceptual measures, all of the measurement scales used in this thesis will be tested for reliability and validity, as outlined in Chapter 6.
Magister Manajemen, Universitas Katolik Parahyangan, Bandung
Governments have realised the need to encourage entrepreneurs to open small businesses believing that the development of the small business sector will decrease high unemployment rate thereby leading the country to a sustainable economic development. However, research shows that this aim cannot be achieved by only facilitating access to finance to entrepreneurs but that some management strategies such as riskmanagement should be introduced, understood and applied by small business owners, in order for their businesses to go beyond the estimated survival period of three to five years. This paper reviews and provides background to which riskmanagement techniques are applied within the ambit of small enterprises. The review shows that not many SME owners, managers, entrepreneurs or key designated employees effectively make use of a well- structured riskmanagement tool and technique within their businesses, to achieve growth and sustainability.
There is the risk of all activity that we take part in, it is found everywhere and spreads through every issue of life . In the global business environment, unexpected situations create severe loss exposures . In a typical small and medium enterprise environment, where access to capital is limited a sudden change of events could likely lead to operational activities being interrupted, financial loss and even bankruptcy . It is therefore important to have in place effective measures to counter such events. The practice of riskmanagement in small and medium enterprises (hereinafter SMEs), especially small firms is usually determined by the attitude to risk and the beliefs of the owners . There is an informal approach to the implementation of riskmanagement procedures, decisions are made in relation to the status of their business as a unit while ignoring techniques to manage risk . These decisions are linked irrevocably as the strategic decision made by owner-managers reflecting the management of risk they face .
enterprises must properly coordinate the internal control departments. In order to improve the efficiency of the enterprise development, small accounting units will be used, so that all departments and individuals will start internal control and riskmanagement in their own interests. At the same time, due to the imperfect concept of internal control and riskmanagement, many departments are difficult to take the gains and losses of the overall interests of the company as the starting point in the implementation of the internal control system. This has led to a lack of coordination in the development of various departments, which has caused the internal control objectives of enterprises to deviate from the actual control. As the core of internal control, the finance department can only reflect the actual operation results of the enterprise, and it cannot manage the internal control situation before and during the event, which leads to the improper or inappropriate
Since 2001 China's accession to the WTO, China's rapid economic development, foreign trade and economic cooperation continue to strengthen, foreign trade enterprises in international trade volume rising, from 580 billion U. s.dollars in 2001 to 24 trillion U. s.dollars in 2016. At the same time in 2005 the people's Bank of China decided to reform the RMB exchange rate, the interest rate will be fixed by a single existing RMB exchange rate pegged to the dollar has gradually changed to the market as the basis, with reference to a basket of currencies managed floating interest rate adjustment. In recent years, the international monetary crisis and the international financial crisis in 2008 have led to dramatic changes in the exchange rate of currencies in the international market. Since 2015 8.11 the exchange rate reform, China implemented based on market supply and demand with reference to a basket of currencies, the managed floating exchange rate system, to further promote the marketization of RMB exchange rate, two-way fluctuations of the RMB exchange rate also increases accordingly. China's foreign trade enterprises in the face of this series of foreign exchange rate changes, the enterprise is unavoidable in the import and export trade in because of the change of exchange rate affects the value of the enterprise, the enterprise of its own exchange rate riskmanagement and the use of foreign assets and liabilities demand rapid growth. This also puts forward higher requirements for the bank's design, innovation, differential marketing and risk control of foreign exchange derivatives.