Page 69 - IMDR MSME BOOK 2021

Managing Finance in Micro, Small & Medium Enterprises
Risk identication is the rst step in the risk
management process. It guides the assessor in the right
direction. After identication only, the advanced steps of
Risk Measurement, Risk Monitoring and Risk control are
possible.

There are many kinds of risks that a business may face.
They could be Capital risks, Liquidity risk, Business
Strategy risk, Business Environment risk, People risk,
Legal risk, Technology risk, Group risk etc.

The risks that a business may face could be categorized
as below:
Ÿ Operational Risk – The risk associated with
processes and people.
Ÿ Financial Risk – Risks related with non-availability of
necessary nance at the time of need
Ÿ Credit Risk – Risk of suffering bad debts
There are few other risks that business might face.
All risks are not faced by all businesses. Many risks are
specic to industry/sector. Above listed risks however
are common to all businesses.
The respondents from MSME sector were asked
questions to assess their risk awareness which in turn
leads to readiness to face such risk.
In answer to “Do you have a framework of Risk
Identication related to business?”, 74% respondents
said that they do have a framework for risk identication.
However, 26% respondents said that they lack a risk
identication process.