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SMEs need to manage risk

Nov 23 2007

Most SMEs do little to manage risks as "they're too busy getting on with the job", says the Institute of Risk Management (IRM).

Smaller companies have little in the way of contingency plans to prepare them for industry changes.

It is only when a company becomes bigger that it begins to think of financial, safety or security risks, claims the body.

Ian Fraser, marketing manager for the IRM says: 'Although there's no legal requirement for a small business to manage its risks, they should do so.'

He added there maybe a conflict between a company's need to take risks to succeed and preparation for the future but "forethought is better" if change is anticipated.

Results from this year's Grant Thornton International Business Report of UK businesses with less than 200 employees, illustrate how poorly equipped SMEs are for any risks to their business.

Over 60 per cent have no mechanisms in place to deal with major regulatory change in their industry. A further 78 per cent have no strategies in place to deal with damage to their reputation.

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