Managing Risks through Mitigation Strategies: Evidence from Cameroonian Small and Medium Enterprises

Abstract

While SMEs are widespread and largely influence the economy of nations, its risk management is little known and has received limited attention. With regards to the importance of the managers in these types of companies; the purpose of this paper will be to investigate the relationships that may exist between the profile of the managers of the SMEs and the choice of risk mitigation strategies. By so doing, it turns out that the perception of risk, the managers and their levels of higher education influence the adoption of risk mitigation strategies in SMEs. In addition, the strategies used to manage risk are diversification, cooperation, selection of suppliers and insurance.

Risk management in small family firms: insights into a paradox

“…As a consequence, FFs are found to exhibit lower levels of risk management activity (Faghfouri, 2013; Brustbauer, 2016). Also, given the scarcity of their resources, smaller firms put less emphasis on risk management than larger firms (Brustbauer, 2016; Mamai and Yinghua, 2017) and follow a more passive, reactive approach when dealing with risks (Brustbauer, 2016). While previous research, therefore, agrees that small and FFs rely on fewer risk management activities and rather informal risk management mechanisms, only limited explanations are offered as to how risks are actually managed in these firms (Moschella et al , 2020).…”

“…In the context of risk management, entertaining tightly knit personal relationships, as well as networking and collaboration, are widespread risk management practices of small (family) firms (Gao et al , 2013; Mamai and Yinghua, 2017). By drawing on close collaboration and their network, firms gain access to the resources necessary to manage their risks effectively (Mamai and Yinghua, 2017).…”

“…In the context of risk management, entertaining tightly knit personal relationships, as well as networking and collaboration, are widespread risk management practices of small (family) firms (Gao et al , 2013; Mamai and Yinghua, 2017). By drawing on close collaboration and their network, firms gain access to the resources necessary to manage their risks effectively (Mamai and Yinghua, 2017). The quality of their relationships with key stakeholders helps mitigate risks as this high level of intimacy with customers, suppliers and capital providers enables the firm to better assess the risks that come along with these stakeholders.…”

“…It encourages firms to consciously face and address the risks and opportunities that go along with their business models and thus enhances risk awareness (Brustbauer, 2016). Risk management should also translate into better operational and strategic decisions (Mamai and Yinghua, 2017) that enable the firm to allocate its scarce resources more efficiently (Hollman and Mohammad-Zadeh, 1984) and to seize otherwise unnoticed opportunities (Brustbauer, 2016). Being aware of the risks associated with entrepreneurial activities reduces uncertainty (Verbano and Venturini, 2013) and allows the firm to better cope with risks (Hollman and Mohammad-Zadeh, 1984).…”

Risk mitigation in supply chain management process: procurement using house of risk method at PT. Pertamina EP Asset 4

“…Risk management can help reduce risk and create opportunities for companies. The application of risk management by companies can reduce financial losses, improve business performance, good business practices, and increase their competitive advantage (Mamai & Yinghua, 2016). Accuracy in risk management can lead to a greater reduction in risk.…”