Loss Control and Loss Control Strategies in SMMEs Operating in a Developing Country: A Literature Review

A large proportion of South African Small, Medium and Micro Enterprises (SMMEs) make use of customised internal control initiatives and customised risk management practices to mitigate and/or manage risks, to provide reasonable assurance regarding the attainment of objectives in the foreseeable future. According to research studies however, the aforementioned internal control initiatives and risk management practices are deemed to be inadequate and/or ineffective. This is especially the case as these business entities are predominantly focused on preventing generic risks in relation to the safeguarding of assets and independent checks, while ignoring key risks which may be detrimental to the attainment of their objectives. Since approximately 70% of South African SMMEs fail after being in existence less than four years it is highly probable that these business entities are not paying enough attention to mitigate and/or manage key risks (potential loss events) and controlling actual loss events. Hence, this exploratory study places emphasis on theoretically investigating loss control and sound loss control strategies evident in South African SMMEs.