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Crisis Management and Risk Management in SMEs: Towards an Integrated Early Warning System

In: Crisis Management for Small and Medium-Sized Enterprises (SMEs)

Author

Listed:
  • Chiara Crovini

    (Aalborg University Business School)

Abstract

Risk is intrinsic to each company, and threats can come unexpectedly. Over the past few years, the strict interaction between crisis management (CM) and risk management (RM) has become particularly relevant for small and medium enterprises (SMEs), which have experienced severe difficulties in dealing with crises (e.g. coronavirus pandemic). Most of those companies have no approach or a rudimentary approach to crises, and only a few prevent insolvency or bankruptcy in a timely manner. Accordingly, it is crucial to develop an RM approach that can adapt to the specific characteristics of SMEs and that considers both financial information and non-financial information as early warning indicators of a crisis. Each SME needs to follow a coherent, logical and integrated process to determine if there are liquidity problems and the stage of the financial distress, thus considering a set of indicators as integrated with the risk analysis concerning the business environment, risk mitigation strategies and responses. Therefore, this chapter proposes the integration between risk management process and the most relevant key financial early warning indicators used by practitioners and default prediction models.

Suggested Citation

  • Chiara Crovini, 2022. "Crisis Management and Risk Management in SMEs: Towards an Integrated Early Warning System," Management for Professionals, in: Susanne Durst & Thomas Henschel (ed.), Crisis Management for Small and Medium-Sized Enterprises (SMEs), pages 215-233, Springer.
    • Handle: RePEc:spr:mgmchp:978-3-030-91727-2_13
    DOI: 10.1007/978-3-030-91727-2_13
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