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Risk Management

Lever for SME Development and Stakeholder Value Creation

Edited by

Céline Bérard

Christine Teyssier

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Preface

Nowadays, risk management can be considered as a valuable “resource”, capable of generating a competitive advantage for companies. It strengthens the company’s ability to not only better manage risks inherent to its strategic choices, but also to seize various developmental opportunities available and improve its performance (market expansion, technological partnerships, etc.). Risk management not only has a strategic dimension that is crucial for the development and success of companies, but also a global dimension. It must be analyzed as a global process that requires managers to define the level of acceptable risk that their company is able to bear, identify the risks incurred, and assess them in terms of criticality in order to prioritize them, implement appropriate risk management measures, and communicate this approach to the internal and external stakeholders of the organization.

Risk management practices in companies are developing, in particular as a result of new international reference frameworks that consider risk management as their main concern (for example ISO 31000: Risk Management or COSO: Enterprise Risk Management). Even though large enterprises are more likely to adopt a comprehensive and integrated risk management system, in particular because they are more frequently subject to regulation, SMEs (Small- and Medium-Sized Enterprises) are also concerned. Unfortunately, risk management in SMEs, due to the inadequate human and financial resources which characterize them, is unconventional, rather intuitive, quite fragmented, pragmatic, proportionate to the stakes, and often implemented in a reactive manner. Rather than a constraint or an obligation, risk management in SMEs today deserves to be studied with regard to organizational and entrepreneurial dynamics because it constitutes a real opportunity for these companies to improve on their practices and performances. Risk management can be a performance, value creation and innovation lever for SMEs.

This book, which is divided into three parts, brings together 12 chapters in an academic research format. It enables us to understand risk management in the context of SMEs from different perspectives.

As a preamble, Maria CREMA introduces, using an exhaustive literature review, the major questions relating to risk management in SMEs as well as future research approaches.

The first part of the book places risk management in SMEs at the center of questions on governance and creation of stakeholder value, both for the internal and external stakeholders of the organization. In Chapter 1, Martine SÉVILLE and Christine TEYSSIER strive to understand how the actors and governance bodies within SMEs are likely to influence, in an enabling or constraining manner, the way in which risks are managed within the organization. In Chapter 2, Camille DE BOVIS and Sylvaine MERCURI CHAPUIS show that the integration of the ISO 26000 standard in SMEs prompts them to investigate new ways of understanding risks and engage more specifically in responsible and joint risk management. In Chapter 3, Martine SÉVILLE, Caroline CHAMPAGNE-DE-LABRIOLLE and Nathalie CLAVEAU study the economic dependency relationships of SMEs. They express the need to develop a systemic approach to economic dependency relationships in order to better manage negative risks and exploit opportunities. In Chapter 4, Laure AMBROISE and Isabelle PRIM-ALLAZ highlight the specificities of reputation within an SME context and the risks associated with it. They identify several operational levers that can enable SMEs to enhance and preserve their reputation.

In the second part of the book, risk management is analyzed as a lever for organizational development. In Chapter 5, Josée ST-PIERRE and Richard LACOURSIÈRE demonstrate that the introduction of a risk management system in SMEs would, while improving the performance of the company, contribute in demonstrating management quality, reassuring funders and facilitating access to the financial resources necessary for the development of the company. In Chapter 6, Céline BÉRARD and Nathalie CLAVEAU strive to understand how risk management can transform SMEs, while exploring organizational and strategic changes. In Chapter 7, Jacques BERTRAND and Josée ST-PIERRE seek to identify the capacities that need to be developed within SMEs in order to carry out a fair and relevant identification of the risks inherent to new product development. In Chapter 8, Manal EL BEKKARI, Catherine MERCIER-SUISSA, Céline BOUVERET-RIVAT and Lynda SAOUDI propose a literature review on counterfeit risk factors caused by industrial subcontracting at the international level. They highlight the challenges for SMEs faced with this risk to implement a formal protection to protect their industrial property rights or adopt other informal protection forms or practices.

The purpose of the third part of the book is to bring the role of the individual, that of the owner-manager, back to the center of the risk management process. In Chapter 9, Saulo DUBARD BARBOSA and Luc DUQUENNE invite us to reflect on the major role of the supporting systems in the entrepreneurial process and demonstrate the importance of support experts and mentors being adequately trained in order to better understand the cognitive bias of risk management. In Chapter 10, Caroline BAYART and Séverine SALEILLES address the issue of educating entrepreneurs of necessity towards proactive risk management practices. Specific support mechanisms are needed, considering the vulnerability of these entrepreneurs, like those that can be developed in microinsurance organizations. In Chapter 11, Lynda SAOUDI and Stéphane FOLIARD propose a reflection on the consequences of transformation and imbalances that the enterprising SME may encounter and the risks that it must manage in order for the approach to be successful. The development of agility makes it possible to develop the necessary ambidexterity by managing possible frictions. In Chapter 12, Nathalie CLAVEAU, Muriel PEREZ, and Thierry SERBOFF demonstrate that there may be a gap between the manager’s perception of failure risk and the company’s actual failure risk. The manager’s perception biases, in particular optimism and overconfidence biases, are put forward as explanatory factors.

To conclude this book and fuel discussions on this complex concept of risk, Alain Charles MARTINET proposes a set of epistemic benchmarks with emphasis on risk, management, and strategy.

Céline Bérard
Christine Teyssier
September 2017