RISK MANAGEMENT IN CORPORATE GOVERNANCE OF SMES: FINDING INNOVATION IN TRADITIONAL THEORIES

This study is a critical literature review that aims at providing the foundations for further empirical research. It focuses in particular on the role of risk and risk management process in SMEs. We discuss the need for companies to reassess their governance structure to ensure an adequate risk management. Through the deductive approach, theories and perspectives of the most important researchers were analysed and we studied how SMEs should rethink the internal control system and risk management and how they can investigate what theoretical bases academics should refer to in order to support a sound and effective corporate governance and internal control system. We have made an attempt to develop an agenda for a discussion of the future role of risk management in SMEs. Moreover, we try to ensure that companies pay attention to the role of risk culture within their business. Creating corporate values, communicating them and training the employees should be some of the key drivers for the sustainability, competitiveness and value creation of each company. Our first aim is to underline that the solution to implement a proper risk management function and the right corporate culture and values in each company is to go back to tradition. Tradition can lead to innovation within theories as we concentrate on the company as a dynamic and complex system, coordinated in all its functions, as stated by the original theories that generated business administration as an independent field of research.