Risk management and firm size: a survey of Italian private companies

Abstract

This paper studies enterprise risk management (ERM) systems within private\ud firms, and examines how firm size influences risk settlement decisions inside\ud micro, small, medium and large unlisted corporations. This paper contributes to the\ud literature with an empirical analysis of whether private firms consider it worth\ud managing risk using formalized organization and procedures, even if this is not\ud imposed by any mandatory rule or by self-regulation. Submitting a questionnaire to\ud a sample of Italian unlisted companies, it is found that 67% of respondents have no\ud risk management department and only 10% are planning to create one. It seems\ud that formalized risk-management systems amongst private entities are not\ud widespread. It is likely that significant opportunities remain, especially for medium\ud and big organizations, to strengthen underlying processes for identifying and\ud assessing the key risks that the entity normally faces

Enterprise Risk Management In Private Firms: Does Ownership Structure Matter?

“…Moreover, private firms seldom have formal risk-reporting procedures or internal ERM regulations (Henschel, 2010;Gao et al, 2013). Lastly, there is no tendency for smaller firms to adopt advanced ERM practices, such as the use of quantitative techniques for risk identification and measurement, the enrollment of a professionally qualified risk manager or chief risk officer or the settlement of a dedicated risk management department (Tagliavini, 1995;Petroni, 1999;Mafrolla & Matozza, 2014). The application of ERM in small and medium-sized enterprises may be effective, despite the limitations they often experience.…”