Enterprise Risk Management (ERM) Practices among Malaysian SMEs: The Three Steps Process to identify Adopters and Non-Adopters of ERM for SMEs

According to the World Bank research involving SMEs from 104 developing countries has found that small firms have the largest shares of job creation, highest sales growth and employment growth compare to large firm. However, large firm is more productive. Similarly, SMEs in Malaysia also contribute significantly to the economic development especially in creating new job opportunities. SMEs involvements in business expose themselves to risks. Hence, SMEs need risk management. A review of current literature was focus to the adoption of ERM among large firm. However studies that have been conducted to examine ERM adoption among SME are still lacking. More important, the identification of adopters and non-adopters are based on the large firm's ERM indicator such as Chief Risk Officer (CRO) or COSO (2004) whereas SMEs with difference characteristic need a suitable adopters and non-adopters identification process. Thus, the main objective of this paper is to propose a simple and systematic identification process of adopters and non-adapters of ERM for SMEs.