During a financial crisis, Small and medium sized Enterprises should observe current costs deliberately and gauge on potential cost, which can be incurred due to numerous risks. In all businesses, risk is intrinsic entirely in all business operations. Therefore, it is crucial for an enterprise to be in possession of proper knowledge and strategy on how to identify risk attributes and be able to prioritize scale and value, design mechanisms and action to lower the risk. It is also important to monitor them continuously to guarantee a business’s survival and creation of practical esteem. This is significant primarily for Small and medium estimated Enterprises that are presented to the harming impacts of dangers because of constrained assets and basic components. Small and medium sized Enterprises are crucial to the growth of any economy. Nevertheless, these business ventures are prone to risks like financial, operational, strategic risk among others. In addition, the scheme to avert small business risk is not in a systematic development and performance.

The study objective is to examine available writing regarding the matter of hazard administration for SMEs. The analysis derives interesting characteristics from the scientific studies, highlighting gaps and guidelines for future research. The study will explore the risk management strategies that are used by Small and medium sized Enterprises in Saudi Arabia. To achieve the objective, the researcher used secondary data through extensive review of literature that had been published by other scholars. The researcher used books, journal, articles, and research papers that majorly focused on the objectives of the study with emphasis on recently published data materials.

CHAPTER ONE: INTRODUCTION

1.1 Introduction

Risk is omnipresent and inevitable in all occupations, including the activities in private and public sector (Verbano and Venturini, 2013). From the enterprise perspective, risks are defined as the threat to businesses from planned and unplanned events that negatively or positively affect the operations of a firm. These firms above all are sources of employment for the large number of youths, especially, in the developing countries. This makes it a very important area where increased focus, as far as, the research is concerned in order to define why these firms do not thrive past their first year of operation. Many SMEs face various risks and one of the major risk category is operational risks that are tied to infrastructure weaknesses, inadequate/scarce raw materials and competition faced from large-scale venture. Poor risk management has resulted to the above mentioned challenges since one of the major weaknesses is lack of diversification as a risk management tool that could have been relied upon by the government. The Saudi Arabia government has put emphasis and focus on the oil industry. Therefore, most of the infrastructure put up favors the oil industry. This means that most of the funds and revenue collected by the government are channeled towards the oil industry forgetting other key areas like agriculture, information technology, transport industry and tourism (Zerban etal 2015). Therefore, poor diversification has costed most SMEs since they suffer from poor attention of a government whose attention lies on one sector. In addition, most SMEs face compliance risks, whereby, most of the policies introduced by the government fail to favor other areas like agriculture and tourism since resource allocation policies tend to favor the oil industry. Financial risks are inevitable in SMEs and it is evident that the government has not been offering enough financial support to SMEs (Zerban etal 2015). In addition, investment opportunities are not limited when compared to the training since most entrepreneurs and the public at large have been denied training advantage that can be widely offered by governmental support. Therefore, the government has not been aggressive enough to control these risks through avoidance as a risk control mechanism, where, some challenges can be avoided by SMEs.

Risks are mostly known to cause negative impacts, and they prevent enterprises from maximizing their opportunities. It is crucial to note that all human activities culminate risks and uncertainties. Widely, it is agreed that the risks are at a high level in the business environment compared to other sectors. This implies that, each business decision made and entrepreneurial functions are linked with risk. This is applicable in the business of Small and medium sized Enterprises as they are faced with risks as it is in the big firms. In the real business world sector where market perfections are involved, there is needed to manage these kind of risks as a way of securing their business continuity, as well as, additional value through the avoidance of transaction cost. Therefore, researchers and scholars have emphasized the need to have a pro-active risk management strategies in all organizations irrespective of their sizes and sector of operations.

In an extensive perspective, emergencies and crises are categorized into three key categories, namely; malicious functions, natural disaster and systematic failures that emanate from the human system. Nature is involved in many things that disrupts plans that have been created by man. In the case of malice, the acts are an associated with the issues regarding human beings who suffer from character flaws or excessive competition. In the past decade, management of corporate risk development has gone far beyond insurance, as well as, financial exposure hedging to comprise a variety of other forms of risk. Mostly operational risk, strategic risk and reputation risk. It is important to note that a large number of studies have dwelt more on risk management of large firms, thus undermining risk management in small firms. This is based on the perception that risk within these firms is small and less catastrophic where studies have concentrated on occupational health hazards.

It is important to note that SMEs are challenged with major challenges frequently and poor risk management is one of them. Once this approach is undertaken appropriately, it can assist these enterprise managers or owners in the identification of significant risks that are likely to jeopardize the existence or success of an enterprise in time, and handle them efficiently (Miller, 1992). This is following the fact that compared to larger enterprises, profits enjoyed by Small and medium sized Enterprises are less often due to economies of scale, and not all of them have the access to a wide resource base (Burgstaller and Wagner, 2015). One notable thing about these Enterprises, is that they have a low equity ratio, and they are comparatively susceptible to external events as compared to large enterprises (Altman et al., 2010). This clearly indicates that small and medium-sized enterprise too, like large enterprises, face risks, especially now that their survival is highly threatened by a smaller set of financial and non-financial resources. As a result, any form of misjudgment or failure to take note of the risks can have disastrous effects that are likely to range from customer loss, damaged, liability, environmental damage, and bankruptcy (Hollman and Mohamed 1984). This becomes worse among SMEs given the fact that many of them do not adequately apply risk management practices due to affordability constraint (Marcelino, et al., 2014). In addition, there has been an increasing volume of literature writing on the specifics of hazard administration in Small and medium sized Enterprises in the recent years. However, it remains fragmented and there is no systematic review conducted on the topic so far. This kind of review would be valuable, whereby; systematic review integrates existing research from various fields, and in this case, from small business management and finance/risk management. In Saudi Arabia, Small and medium sized Enterprises have a significant role to play in economic development, job creation, regional development, social and entrepreneurial development. However, there is no comprehensive exploration that has been done with the aim of examining risk management of Small and medium sized Enterprises in the country. Therefore, an understanding of risk management for SMEs are important, especially in countries like Saudi Arabia that have dwindling small and medium-sized enterprise sectors. Effective risk management framework is important for the achievement of SMEs and the complete growth of various economies in the world.

Therefore, because of the limited research on risk management within the sector of SME in Saudi Arabia, the aim of this research is to increase in the available knowledge (Smit, 2012). It aims at evaluating risk management techniques that are used by SMEs’ owners, particularly in Saudi Arabia. It also explores the economic framework in which Small and medium sized Enterprises in Saudi Arabia operate. In addition, it also explores the risk management framework that may be suitable for SMEs in Saudi Arabia before validating its effectiveness and applicability. The study goes ahead to determine the relationship between risk management and SMEs performance. This research, therefore, is one of the few studies that focuses on the hazard administration in Small and medium estimated Enterprises in Saudi Arabia.

1.2 Background of the Study

Risk is the possibility of occurrence of economic or financial losses of gains, and it is linked to the pursuance of certain actions or activities. The risk is found in almost all human actions, all the enterprises, and management levels. Despite the fact that risk is inevitable, it can be predicted through experience and sound management (Rostam et al., 2014). Risk management, therefore, involves the identification of risks, measuring the changes, the possible effects of risk and mitigation of risk with minimum resources. Risk management is found in a number of fields, including private and public organizations. As compared to larger organizations, SMEs also requires effective risk management strategies to survive in the uncertain and competitive business environment. Many Small and medium sized Enterprises lack adequate resources and expertise to respond to internal and external threats that endanger their survival.

Risk can be categorized into static and speculative risks. Static risks cause damage without the possibility of any opportunity of their occurrence. Such risks are always negative, and they are unexpected because they are accidental. Speculative risks, on the other hand, can cause either opportunities or damages. They are typical entrepreneurial risks, as they are associated with planning and managing of business operations. In addition, risk can be caused by internal or external factors. The external factors that can cause risks include monetary, natural, social, political, and mechanical variables. The inward elements, on the other hand, include infrastructure, human, and process factors. Therefore, risk can be caused by internal and external factors in an organization.

A number of studies have shown that many Small and medium sized Enterprises lack explicit risk management strategies. At the same time, they have no clear picture of the risks that they face in the business environment because they spend little time and resources to identify the potential threats. About 30% of Small and medium sized Enterprises across the globe are not ready to handle the risks that they face. Small and medium sized Enterprises have poor risk management strategies due to lack of adequate resources, expertise, and technological systems. Fear of the additional cost of operations also makes small and medium sized Enterprises to avoid risk management practices. Unlike large companies that have elaborate risk management strategies, a significant number of Small and medium sized Enterprises lack effective risk management strategies that are crucial to their survival.

SMEs assume a vital part in the financial development and improvement of different nations over the across the globe. They serve and satisfy the customized needs of various consumers and industries in all corners of the world. A significant number of businesses in Saudi Arabia are found in the small and medium-sized enterprise sector. It is clear that 92% of all businesses in Saudi Arabia are SMEs and creates about 80% of all workforce found in the country. However, the contribution of Small and medium sized Enterprises in the economy of Saudi Arabia is only 33% of the GDP, which is lower than numerous countries that are in the development era in the world, but higher that many GCC countries. At the same time, the Small and medium sized Enterprises in Saudi Arabia can only operate for an average period of seven years. Therefore, the ability of the Small and medium sized Enterprises in the country to survive is very limited due to the lack of appropriate strategies, including risk management strategies.

1.3 Research Problem

Many SMEs in Saudi Arabia suffer from poor risk management strategies (Raghavan, 2005). First, the government of Saudi Arabia focused too much on oil at some point neglecting diversification of its industries. This resulted in fewer resources being allocated in the private sector, hence most SMEs in the private sector have suffered from inappropriate funding mechanisms and poor tolerance thresholds (Zerban etal 2015). In addition, as an extension to the mistakes made by the leadership and governing the authorities, most SMEs had these problems tickle down to the internal management organs, whereby, risk management tools like avoidance of risk, risk retention, risk transfer and loss control were not employed due to lack of training, allocation of a budget and guidance from the management (Taxevity, 2012). Therefore, many SMEs find themselves in a position of debt, poor profits and closure of daily operations due to chaos caused by poor risk management skills of the staff. Risk management should involve management systems like lean management and inspection of supplies to avoid risk of procuring goods at exaggerated levels and avoid loss caused by untimely deliveries. As a result, risk management is a major concern in this study meant to identify the challenges that are caused by poor risk management and how they can be avoided in SMES in Saudi Arabia.

Despite the risk management necessity, a large number of SME’s observe a detailed risk management process rarely, especially the laid down strategies (libelous, Kirytopoulos, and Malandrakis, 2006). This is because involvement in risk management and assessment requires application of particular human resources and a budget, which are not abundant in Small, and Medium sized Enterprises.

1.4 Research Objectives

The research focuses on the risk management applications in Small and medium sized Enterprises in Saudi Arabia in comparison to other countries in the world. Therefore, its primary objective is to create, develop and establish a framework that will facilitate the Small and Medium sized Enterprises in Saudi Arabia to manage risks, avoid blind risks and minimize uncertainty while in the process of introducing, and promoting new ventures in their target markets. In order to achieve the main objective, the paper has some sub-objectives that include:

· To determine risk management techniques used by SMEs in Saudi Arabia, as well as, compare these tools to other countries and hence develop a comprehensive framework of managing, avoiding and minimizing risks.

· To investigate the characteristics of business operations and economic status these businesses operate in order to understand the risks they are likely to be facing.

CHAPTER TWO: METHODOLOGY

2.1 Research Approach and Design

The research utilized both qualitative and quantitative techniques to answer the questions raised in chapter one of the study. The study focused on risk management in Small and medium sized Enterprises. A clear picture of risk management in Small and medium sized Enterprises are important because it makes it easy to note the risks that face small and medium-sized enterprise. This knowledge also helps in identifying the tools and techniques utilized by these Enterprises in Saudi Arabia to address risk issues. In this case, a qualitative design was selected in order to assist in data collection within the target population or case. Crosswell (1998) refers to qualitative research as an inquiry process of comprehension that is based on the methodology traditions that investigates a certain problem. In addition, this chapter revolved around the compilation of data and information about Small and medium sized Enterprises in Saudi Arabia as compared to other GCC countries.

The methodology research model used in this research required the study to be undertaken within its context with an emerging design. In this research, the researcher followed this data collection procedure and analysis (Merriam, 1988). In a case study, the researcher serves as the instrument of data collection while conducting a review of materials. The program under review receives an extensive description from the researcher. Furthermore, the researcher managed to organize and analyze data with respect to general themes. In addition, the researcher role helps to build a complex and holistic picture and manages to conduct the research within the well-established setting. Being a data collection instrument, the researcher in this study collected data in the form of document reviews.

2.2 Data Collection

The researcher used secondary data. The secondary data in this researcher consisted of research studies and other literature that had been written by other scholars and researchers. In other words, data were collected from already existing literature such as books, journals, policy documents, legislation, statistics most especially from government sources and surveys, research studies as well as relevant theory. Therefore, the secondary data was obtained from published thesis and reports, textbooks, journals, and articles. The secondary data sources were found to be necessary for this research because they are cost-effective. In addition, the secondary data played an important role in understanding the topic and addressing the questions and objectives of the study. However, the use of secondary data could have been disadvantageous because it was collected to meet other objectives that were different from the one being addressed in this study. Therefore, there is the inappropriateness of secondary data. At the same time, the secondary data may be inaccurate or outdated, which may end up interfering with the accuracy and quality of the findings of the study.

2.3 Sampling Design

This research adopted the simple guidelines set by Tranfied et al., (2003). These guidelines assisted in the process of systematic reviews of the literature within the management and business fields. A systematic review of the literature was conducted in three steps; planning, conducting and disseminating and reporting review (Tranfied et al., 2003).

The initial phase was the planning one and mainly showed the review motivation as presented in the literature review section. The second step is conducting the review where it involves identifying relevant research materials to collect data. This involves identifying journals, books, thesis papers and other relevant data materials deemed crucial in this research and those that dwelt on Small and medium sized Enterprises. As a result, a search of key words in numerous databases was conducted. Some of the databases involved were the following;

· Wiley Online Library.

· Elsevier Science Direct.

· Scopus.

· Emerald.

· ISI Web of Knowledge.

· Springer link

· EBSCO Business Source Elite.

In the preliminary inclusion of material in this research the abstract, keywords and title of the article were expected to contain a set of keywords. The first set addressed Small and medium sized Enterprises and was operationalized using phrases such as small business/firm. The second group focused on managing risk, and the keywords, in this case, did not specify the type of risk and issues related to risk such as asymmetry of information. These aspects can affect risk management, but they seem to be concerned more with sources of risk (Marshall & Weetman, 2002). The other form of keywords included a combination of risk and management where a search phrase of managing risk and risk management was implemented on them. All materials that were identified as relevant sources of data were included, but were expected to fulfill certain inclusion criteria as well. The first one was a journal's quality, inception. This means that the journals were included in the list if they were peer-reviewed academic journals that dwelt mainly on management of risk among SMEs. This method led to a selection of 60 materials of all categories. The second inclusion criteria arrived at after a scan was made of the materials found to check if they had a specific topic of the literature review. However, materials that were practitioner oriented and did not rely on scientific research were excluded. Additionally, the following research procedures were conducted in detail:

1. Identification of Papers And Selection of Databases:

To help in the identification and selection of review papers, a search of all the already existing electronic journals in a number of journal libraries such as emerald, Ebsco, Compendex, Ingenta connects science direct and web of science, was conducted. This was made possible through the employment of keywords such as risk management in SMEs. For preliminary inclusion as far as this review is concerned, the keywords, the title or the article abstract had to possess a combination as well as a conjunction of two groups of primary words.

1. Paper selection: in this case, this procedure led to the elimination of a number of research articles that did not revolve around risk management in Small and medium sized Enterprises and related to topics such as disaster risk, clinical risk, and engineering risks.

2. Classification of diverse study thematic classes and analysis: the data attained from the chosen articles were also classified based on the research procedure that was employed in previous research such as Azyabi and Fisher (2014), and was adopted based on consideration of a number of perspectives such as

Research type in the sense that all those that concentrated on applying the research hypothesis or research frameworks to assess them empirically were classified as experimental. Others that applied concepts, models or ideas to develop literature reviews were classified as a conceptual framework.

Risk streams and risk types were also identified based on previous research reviews such as bah added Houghton and drew 2013:65. In this category, the types of risk include first, hazard risks such as personal injury, property damages, windstorm, theft, and other natural perils as well as liability claims. Second, financial risks, which in this case encompass asset value, foreign exchange, commodity and interest rate (price), liquidity like cash flow, opportunity cost, call risk and hedging /basis risk. Third, operational risks that entail human resources, efficiency, service/product failure, channel management, empowerment and business cyclicality, business and information reporting, annuity subsidize, venture assessment and bookkeeping data. Fourth, key dangers that include harm to a notoriety like misrepresentation, mark/trademark strategic risks that involve damage to a reputation like fraud, brand/trademark evaluation, social and demographic trends, political and regulatory trends.

In all these categories, the risk management process is termed as total whenever all the risk management stages are identified or as "identification" "treatment" and "evaluation" in case a single phase of risk management is applied. In order to see to it that the data analysis process is effective, all the information that was gathered from the selected articles was integrated based on the year of publication and geographical origin.

2.3.1 The Attributes of the Reviewed Articles

In this research, identification arrangement of the bibliographical information and data obtained from the reviewed articles was done with an aim of identifying emerging themes and other important characteristics. In addition, the articles were published in different journals where two publications from each journal were established in the areas of ‘managerial finance,' international,' and ‘small business journal.' Moreover, it is also clear that all the articles, books, journals and magazines reviewed were those published recently. This approach indicated that there is topicality of the risk management in Small and medium sized Enterprises. Furthermore, quite a vast number of the research studies were conducted in developed European countries. Only five articles talked about SME’s in nations classified as developing-china, Turkey, Saudi Arabia and Denmark. It is clear that this issue to some extent can be deemed regrettable because SMEs tend to create an extensive share of firms in emerging countries, and risk management may be their only option to survive in the modern business world which in the process, may help in improving their economy.

2.4 Ethical Considerations

Research ethics is aimed at making sure that the research procedures followed do not have adverse consequences on the research participants or data materials. In most cases, it is expected to make sure that all the acquired information is protected and private. This depends on the data protection act 1998, which states that "individual data must remain confidential and inability to stick to these rules can lead to glitches or even prosecution"(www.legislation.org.uk, 2011). This process may include an exhaustive investigation to deduce the possibility of damage to research members to the point of offering maximum assistance without causing harm (Bryman, & Bell, 2007).

Researchers must have the essence of ethics as far as research is concerned; it is not surprising that some government agencies and education institutions have adopted certain codes and policies that relate to research ethics. This research will take note of some of the key phrases that describes the ethical protection in the contemporary society and which has been established with the aim of protecting the rights of the research participants. The other principle on the notion is the requirement of informed consent. In this regard, the researcher will fully inform prospective research participants about the risks and procedures involved in the research and would give their approval to participate.

2.5 Data Analysis Techniques

According to the arguments by Miles and Huberman (1984), it is clear that there are three simultaneous streams of action in data investigation: information diminishment, information showcase, and conclusion drawing/check. The research test is to bode well out of an enormous measure of information, to arrange the information by examples or subjects, and to convey the path of what the information uncovers. The researcher in this study utilized three regions to present his plan for information examination. They incorporate information administration, information examination, and information representation. This data management, data analysis, and data representation. This area point of interest the systems used to sort out and lessen crude information into important pieces and to change the noteworthy pieces into results. Information gathered from the sources was initially composed of categories. Inside of each category, the researcher searched for classifications to develop that figure out whether all the objectives of the initiative are directed towards the final subject. Next, the researcher thought about the classifications from each category to recognize repeating subjects that outline the level of readiness of the subjects under investigation. These topics were then contrasted to locate the most striking subjects influencing essential preparation.

The analyst utilized a blend of strategies to speak to and report discoveries in this review. A story organization was utilized to give the pursuer with itemized depictions risks and risk management tools and techniques. Tables were utilized to edify the user to relevant information and to outline topic advancement. The objective of the specialist was to show a report that is both lucid and reasonable. The researcher utilized a blend of methods to speak to and report discoveries in this research. A narrative technique was employed to provide the reader with nitty gritty depictions of risk management techniques, tools and a risk management framework for the SMEs. Tables were used to illuminate the reader to relevant information and to show topic advancement.

CHAPTER THREE: LITERATURE REVIEW

3.1 Introduction

It is notable that risk may emanate from uncertainties that are connected to management, political affairs, cultural factors and natural disaster (Köster, 2009. Therefore, the classification of risks in line with their influences is a crucial step to somewhat risk management strategies. As a result, this chapter is aimed at collecting secondary data regarding risk administration in SMEs within Saudi Arabia. In order to make sure that this research area is explored in depth this section presents the literature review on the classification of risks, fundamental risk management terms and business models in Small and medium sized Enterprises risk management theories in small and medium businesses and how they adapt to Small and medium sized Enterprises. It discusses the risk management techniques and some of the risk management models that can apply to SMEs in Saudi Arabia such as the case framework.

3.2 The Concept of Risk and Risk Management

In the business environment, the risk is defined as the uncertainties or circumstances that a business must understand and manage during the implementation of its operations to achieve the set objective (Sunjka and Emwanu, 2015). The above definition shows that uncertainty is embedded on risk and that the latter affects the goals and objectives of the business. Therefore, when doing business, there are certain decisions’ results that cannot be anticipated with assurance because of absence of finished data. As a result, the uncertainty that is linked with business activity is what is known as a risk.

However, it is important to distinguish terms that are used interchangeably in the normal communication to mean risks such as uncertainty and danger. Uncertainty should be utilized when the aftereffect of future occasions is not clear, and the diverse states cannot be linked to the chances of occurrence. The term danger, on the other hand, refers to unplanned and unpredictable results that have a negative effect on something. The risk is different from the two terms in that its outcome can be linked to the probability of occurrence. Therefore, risk, danger, and uncertainty should not be used interchangeably.

Risks are not equally equal in terms of frequency of happenings, based on the consequences or the nature of the risk. These forms two common ways that facilitate in risk classification. This implies that risks can be named in the context of possible risks, imaginary risk, hypothetical risk where either losses can happen theoretically or unlikely exist (Harrington, Niehaus, & Harrington, 1999). In this section, the researcher explores numerous risks associated with SMEs grounded in the nature of them. This exploration will involve financial, operational and strategic risks.

3.2.1 Financial Risk

Financial risk is broad and covers numerous negative risks that are connected to financing, for example, funding risk, liquidity, interest rates, pricing, and credit risks among others. In most cases, this kind of risk is based on the possibility that owners of an enterprise are likely to incur monetary loss in case they invest in a business that is in debt or in other words, if an enterprise cash flow proves to be not adequate to take care of its financial obligations. Financial constraint to any business is a risky factor. This is following the fact that finances in any business fuels development and functionality of the business. In case an enterprise uses the process of debt, financing its creditors and getting them paid before the owners of a firm once the business ends up becoming insolvent. Additionally, financial risk also alludes to the likelihood of a corporation or government nonpayment on its bonds, which would cause those bondholders to lose money. These risks can return in favor of one business and a loss to another. For instance, Small and medium sized Enterprises that specialize in fuel products can be affected by fuel prices; where else this form of extra cost can be huge to a transportation agency (CPA Australia, 2006). This implies that the exposure and consequences that a small and medium sized enterprise is likely to suffer from in terms of financial risks depend on the enterprise financial transactions. This implies that the amount of borrowing compared to its business scope. Therefore, financial risk management is well thought out as a risks management specialization. Additionally, business cash flow as well as operational forecast; management applies a hedging approach as a way of lowering risks in investment and other operations. Certain specific risks inside the financial risk are worth discussing some of these include;

Interest rate risks- according to the current literature, SMEs are viewed as enterprises that depend so much on the external finance, and as a result, a loan is the primary financing source available. Additionally, this also encompasses the fact that the interest rates that are attached to the loan may as well change hence a risk in itself. Using banks as the standpoint Xu et al. (2011), argues that by eliminating the fears of the banks, as well as, their perception about SMEs, it may limit the likelihood or any chance of the interest rates of SMEs changing. Additionally, Abed, Dwivedi and Williams, 2015 argues that those SMEs that possess a fragile financial position, but their owners the pure an unyielding and extensive appetite for risks, the probability of the SMEs being slammed by credit decreases more as compared to those companies that are in a better position financially. In other words, the two authors were of the opinion that a high and strong financial position of any small and medium sized enterprise could help in compensating to a certain extent the high-risk tolerance. Moreover, Almazari (2013) established that those SMEs that have very limited collateral posses a very high chance of being granted a loan when their willingness to incur risks is very low. In other words, this finding clearly indicates that a strong collateral cannot help SMEs to compensate for the negative implications incurred as a result of high risk-taking

The study that was carried out by al-Somali, Gholami, and Clegg (2015) based on data from 328 firms in the GCC, established that SMEs are about twice more likely to choose on incurring a fixed rate but not an adjustable rate as compared to large-scale companies. Additionally, with the increasing firm size or the more a firm continues to grow, the more the chances of choosing on a fixed interest rate decrease. In other words, SMEs, according to the reviewed article were established to be more interest rate risk averse as compared to large-scale firms. One of the notable explanations for the article reviews findings by al-Somali, Golami, and Clegg (2013) is that most SMEs are less sophisticated when it comes to practices of risk management than large-scale companies. This makes it very crucial for them to comprehend the fact that variable-fixed rate can as well come with variable interest rate risk. Furthermore, this enterprise behavior may vary based on the education level of the small and medium sized enterprise owner. Thus, by taking into consideration, the survey of over 4000 SMEs around the globe, Bazhair and Sandhu, 2015 argued that those owners who are better educated stands a high chance of taking a strategic action to reduce any risks associated with finances like interest rate risks.

Risk associated with raw materials

Mukhtar and Schiffauerova (2016) acknowledge this type of risk in their article. This is based on the fact that they believe that due to the abolition and deregulation of subsidies in various agricultural markets, quite a number of SMEs in emerging markets are trying to establish ways of managing the volatility of the cost of producing raw materials. Additionally, some articles that were reviewed indicated clearly that the volatility of raw material costs had made the energy and the agricultural industry to experience a new challenge in the modern enterprise world. Besides, due to the increasing level of competition in the small and medium sized enterprise market the cost of raw materials is more likely to increase, which increases the chances of threats or risk associated with the prices of raw materials.

According to Yousuf and Lawton (2012:217), owing to the fact that there are abolition and deregulation of subsidies in a number of agricultural markets, it is known that so many SMEs are trying to establish ways in which they will be able to manage the volatility of raw material prices. Additionally, al-Akra, Abdel-Qader, and Billah, (2016) also argued that in the modern times, the volatility of raw material prices in energy and agricultural markets has become a new challenge to SMEs. Moreover, because of the increased competition, it is also believed that increasing prices could not possibly be just transferred to the consumers. In this case, it cannot be assumed that all markets or firms operating in a particular market are exposed to the same challenge. Siddique 2014:40 was of the opinion that most large-scale companies have invested so much in advanced technologies which make them be in a better position to revert to cheaper resources whenever the prices extrapolate. However, it is clear that analyzing their opinion according to them, quite a number of SMEs cannot afford to invest heavily in this area hence making them exposed to the risks of raw material prices. Furthermore, because the findings by Schmidt et al. 2016 were deduced from concepts and ideas or rather they were conceptual in nature, they, therefore, require corroboration by advanced empirical research.

3.2.2 Strategic Risk

This kind of risk refers to the probabilities of loss that results from poor strategic plans, inappropriate and inconsistent decision making and plan implementation. This kind of risk refers to the loss of the credit firms as a result of the errors incurred in the process of making decisions and defining the process of institutions activity in a number of SMEs

The key goal of strategic risk management is to ensure that there is a maintenance of the risks taken by an enterprise at levels determined in agreement with its strategic tasks and to make sure safety of assets and capital by minimization of possible losses. These risks are a threat to earnings, corporations’ viability and capital availability (Beasley, et al. 2008). The strength of an enterprise can be determined by its strategic plans such that these plans are used to direct the business operation direction and framework as well. Management of strategic risks needs increased concentration on the risks to the shareholder value as an ultimate objective and at the same time, the effects of external and internal scenarios to the capability of an organization to attain its goals.

To be introduced in the later part of this literature review sector) process (Frigo m., et al. 2009). Understand the strategies of a small and medium-sized enterprises the crucial foundation step towards strategic risk management. Therefore, the assessment procedure must reflect continuously on the corporate model and backed up by valid strategic risk profile and risk management action plan and communication. Some specific risks identified in this case include;

Growth risks

In qualitative interviews conducted on UAE small and medium sized enterprise managers by many, Esper and stank (2014) only a handful of leaders was of the opinion that steady growth is essential for their business. In other words, most of the respondents indicated that managing a large-scale company involves very extensive risks that may not be able to cover for steady growth in costs. Additionally, as much as the growth of the firm is in most cases classified as an essential goal in most large companies, the findings by many, Esper, and stank, 2014 pinpoints that Small and medium sized Enterprises ' manager's views this differently because they believe that steady growth is a risk rather than a strategic goal. Moreover, Bajo et al. (2012) argued that the growth of SMEs is realized through projects but in the end, these pose major challenges because SMEs are limited when it comes to the technical expertise and technology to manage growth projects in a more effective manner.

Bajo et al. (2012) also pointed out the fact that, most of the research respondents linked the prospects of a new agricultural and energy market with a new form of entrepreneurial risks. This article by many, Esper and Stank (2014), views new market ventures as potentially and speculatively very expensive for SMEs. However, the qualitative research works by Mutezo 2013 that revolved around 80 small-scale firms in the US view exports as the least business risk. Moreover, according to research on 311 SMEs in Australia, Banjo et al 2012 argued that those SMEs that employ a proactive approach as opposed to a passive approach to managing risks show signs of expanding to new market ventures. On the other hand, in the process enterprises depends they manage to invest heavily in advanced technologies and new production.

Based on the above contradictory results, it is clear that additional empirical research probably based on quantitative results and large sample sizes should be conducted to help in testing the validity of the finding. This implies that most SMEs view steady growth as a risk rather than a strategic goal can be taken to represent a large population and whether the mitigation of proactive risks holds for large populations as well. Additionally, such research works could be modified and build on the finding of Mutezo 2013 by incorporating a number of growth strategies to establish whether SMEs owners’ perception of the risks that are linked to these strategies differ. Furthermore, the additional future research will be of great significance to the knowledge of risk management in SSMEs, most especially on how and whether SSMEs cope more effectively with different growth types in different ways such as the employment of different risk management approaches to different growth risks.

Supply chain risks

The quantitative research studies by Lavastre (2012) on German SSMEs indicated that SSMEs must be able to provide a variety of products to meet the demands of their customers. However, in so doing, it makes the SSMEs to depend heavily on their supply channels because of the increase in complexity levels. Additionally, Mihai (2012) argued that SSMEs are now venturing into outside markets and in the process, they are no longer able to focus entirely on the local markets which in the process, results in more complex and expensive supply channels. Moreover, with an increase in the complexity levels, it is accepted that most SSMEs are more likely to suffer from increasing levels of trade debt, which is a higher risk to their market survival. In other words, according to Lavastre, Gunasekaran and Spalanzani (2012), those SSMEs that are relatively young and possess unsecured debt arrears are better placed to face solvency as compared to large-scale firms.

When it comes to product procurement, SSMEs are also known to be limited to only one supplier. These enterprises should try numerous supply agents as a way of being efficient. In this case, respondents in the qualitative research study that was carried out by Mihai 2012 indicated that they employ single sourcing as one of their major procurement strategies. Additionally, these research results were complemented by the results established by Rostami et al. (2015), who argued that as the overall volume of purchases is not divided between multiple suppliers, SMEs believe that they are better placed to gain a bargaining advantage over their suppliers hence realizing a price advantage. One funny aspect of this aspect is the fact that it also depends heavily on single suppliers. In other words, in the case of any failures on the part of the supplier may result in production interruptions, in the process, it presents a significant supply chain risk. However, some scholars such as Henschel and Durst (2014), argues that, in contrast to other research works, SSMEs are no more exposed to the effects and consequences of such risk developments as compared to large-scale companies. Besides, given this difference in opinion, it is advisable that any possible future research works to examine whether it is indeed true that SMEs are more vulnerable to supply channel risks as compared to large-scale firms and how SMEs can be able to cope and deal with them more effectively.

Employees and management risks

Universally, it is accepted that knowledge management can result in one way or the other pose a challenge for SMEs. Based on the findings conducted by Terungwa with British managers interviewed in 2012. Employees is a key asset to the development or failure of an enterprise. This means that aspects such as employees’ turnover should be handled with care because they contribute to employees poaching by competing firms and leak the ideas and strategies to the competitors which is risky to any firm. It is clear that most businesses are exposed to loss of management knowledge whenever experienced workers with valuable contacts and knowledge leave the firm. Therefore, Faisal (2013) summarized that the deprivation or rather the loss of long-term workers might be at risk for SMEs because it is possible that no any other employee has the same qualities and attributes as the one that has left. Additionally, in line with this opinion, findings by Faisal (2013) indicate that knowledge that revolves around risk management may at times be informal in SMEs, which in other words complicates the effective establishment of risk management capacity among the employees of SMEs.

However, despite the fact that these findings indicate an important role of managers and employees in SMEs, Terungwa (2012) indicated that most SMEs do not provide training programs to their workers and continuing education. Additionally, according to their article, they also pinpointed out the fact that non-compliance with instructions or accidental damage can as well possess a considerable implication to the company and may as well be a risk factor for SMEs. Moreover, the managers that were surveyed indicated that they were very aware of the issue of property rights infringement, but based on the findings of Faisal (2013), it is clear that their lack of knowledge played a very critical part in barring them from property protecting their very own intellectual property.

3.2.3 Operational Risk

Many enterprises accept that their workers and functions will fundamentally incur errors and play a part in an ineffective operation. In the evaluation of this kind of risk, remedial steps that are practical must be emphasized as a way of eliminating exposures and enhance responses that are successful. On the other hand, a poor operational risk management can damage a firm’s reputation leading to financial damage. This is where behaviors of the SME owner or manager must be observed and maintained in line with the laid down business polies. This implies that the amount or level of loss an enterprise is ready to accommodate and the cost of taking care of the errors determines the enterprise risk appetite. Having noted that operational risk is a summary of the risks an enterprise undertakes in its attempt to operate within a certain field and in this case, business field, this kind of risk is not inherent in the financial market or systematic wide risk. However, it is what remains after the determination of financing and systematic risk and mainly involves risks because of breakdowns in interior process systems and people that needs to be figured out. In most cases, these risks are summarized as human risks because of the discussion that the human error brings into business operation's failure. However, the operational risks refer to all risks that incur from business interior processes that involve products, services offered, people, operational systems and exterior factors. For instance, the banking sector is facing more of operational risk with increased probability (King, 2002). Some of the most prevalent operations risks include employment practices, workplace safety, business practice, system failure, delivery, and process management. Although this risk is commonly felt among the banks, other business investments such as SMEs share a common threat. Small losses enjoyed by SMEs due to customer dissatisfaction or bad business image and pile up and cost businesses significant damage (An Oracle white paper, 2010). There are certain risks that are increasingly sensational compared to others, but what matters is a suitable and strong management structure that is in accordance with the selected operational risk methodology. One notable aspect as far as operational risk is concerned is the issue of SMEs owners risk behaviors.

It is very clear that the individual attributes of the owners of SMEs and the structure of ownership possess a very crucial implication on the direction of the business organization, as well as, the practices of risk management. Based on available literature, it can be said that the risk perception is linked negatively with the appetite of risk in finance and health while at the same time, threats and adverse conditions are linked positively with the size of the organization. SMEs’ owners are portrayed as having a higher perception regarding risk.

In another case, SMEs, financial allocation towards risk management tends to expand depending on the company size and that, those responsible for making decisions as far as smaller companies are concerned are known to possess lower risk tolerance. According to Razi and Madani (2013), it is postulated that because most SMEs have limited financial resources, most of them concentrate on business strategies that possess limited risks as compared to growth -oriented goals. According to Albasri, Mishra and Elbeltagi (2015:66), the attributes of the industry in which the SMEs is venturing in are very crucial because advanced technology or unstable demands can affect the perception of an individual on risks. Additionally, another primary element that emerged revolved around the fact that as compared to SMEs managers in emerging countries, managers from developed countries take more risks when conducting their business operations. In simple terms, it can be said that the risk appetite varies depending on an individual's culture. When it comes to age comparison, Albasri, Mishra and Elbeltagi (2015:66), argued that those SMEs managers that are relatively young have a higher risk appetite as compared to their older counterparts. To complement these findings Razi and Madani (2013), postulated that those SMEs managers that have a deeper understanding or expertise that comes with age were established to perceive situations that are risky in nature more critical and could be classified as individuals who are more risk averse. Apart from age, the education level of the SMEs’ owner was also found to play a very crucial part in risk management since most studies indicated that the intellectual level of the SMEs’ owner related positively to the adoption of risk reduction strategies like strategic actions to curb threats and networking.

3.2.4 Risk Management

The insurance sector is the one that has been known to work with risk analysis and assess SMEs as a way of ensuring that the customers' business profits remain secure. This forms the roots of risk management that back all the way from the 1960s. The concept applied is that of the insurance acquisition making it probable to maintain the business secure against systemic risks. Managing risk enables an enterprise to avoid incurring additional cost that are not budgeted for due to emerging factors that results into loss and other interruption to the smooth operation of the business. Today the extension of risk management is directed towards management of systematic risk and unsystematic risk in the business environment. The process of risk management is an ongoing monitored formal procedure for objective definition, identification of uncertainty sources, uncertainty analysis and formulation of managerial resources that result in an acceptable balance between opportunities and risk. On the other hand, the process can be regarded to a continuous procedure that assists in the improvement of priorities, operations, quality of regulation compliance, attainment of performance goals, financial stability improvement and the ultimate loss prevention and entity damage. In general, it is approved that risk management procedure involves interrelated processes, which will be discussed later in the chapter. However, a risk management process that is holistic is characterized by three key issues that include ongoing monitoring of all risk sources an arrangement of quantitative and qualitative techniques, assess small and medium size enterprise of risk, organizational learning, and monitoring for a positive approach to handling risk, analysis and handling of risk. Furthermore, risk strategy is bestowed on the risk management goal that must be inclusive of important advanced preparation that is with respect to the approach-defined tools and task.

Currently, this approach has changed, and risk management has become a concern for each type of business and especially small enterprises like small and medium sized Enterprises. Management is a term derived from the Latin word Manus, which refers to handling. In business, context management is all about organizing, administering and leading an enterprise and in this case small and medium enterprise. Therefore, risk management is the organization, leading and administration of risk inside these enterprises. According to Smit and Watkins (2012), risk management can be defined as the protection of business assets and profits. This acts like a systematic technique of using business resources in order to achieve certain objectives that concern pure loss exposure in small and medium enterprises. Pure loss is a situation where there is only the probability of loss with no changes of gain. The above definition, therefore, shows that risk management is a structured approach that uses that use different methods to manage business exposure. The management who double as owners in the case of Small and medium sized Enterprises always undertakes it (Newton, 2015). Small and medium sized enterprise managers are the ones that are actively involved in the risk management, as they are directly involved in the execution of the business policies.

The comprehension of risk management has extended over time and comprises of the management of unsystematic risk (Stroeder, 2008). This inclusion is not in line with the Modigliani and Miller theory where they proposed that inside a perfect market the firm value cannot be influenced by financial decision (Dhanini et al., 2007). This implied that an enterprise does not require managing risks in order to secure itself against losses that emanate from unsystematic risk. However, the market does not price any of these actions other than the systematic risk of the enterprise (Miller & Modigliani, 1958). The assumption here is that every investor modifies a portfolio with respect to the risk preferences through diversification. In this regard, risk does not require management from the enterprise (Berk, 2009). However, management applies risk to lower earnings unpredictability.

In an actual business environment, market imperfections are present, but absent from the assumptions made by Modigliani-miller. Risk management in business can have extra incentive to entrepreneurs, despite the fact that the budgetary hypothesis by Modigliani-mill operator discovers it is out of date (Oosterhof, 2001). (Oosterhof, 2001). This implies that not all investors can have the opportunity of diversifying their portfolios. In addition, within the perfect market assumptions, transaction cost and taxes are neglected which in reality makes risk management reasonable (Berk, 2009). Some costs are connected to defaulting such as bankruptcy cost and financial distress. Therefore, in the long-run, the perspective of the theory profits and losses are likely to even out due to volatility In the short run, the misfortunes may bring about money related trouble and cost the business and can be dodged through hazard administration. Risk management can be a business value in case of market imperfections resulting from taxing, financial distress expected costs among others (Switzer, 1996). It is general point is to secure business congruity and support the accomplishment of the organization's objectives by averting risky circumstances in a productive way (Switzer, 1996). However, it is not the objective of balancing every single hazard a business is developed to with in light of the fact that hazard is basic to business movement and hazard disposal diminishes possibilities. This implies hazard is a piece of working together, yet should be overseen legitimately in a hazard administration prepare.

According to the institute of project management, the aim of risk management is to increase the effects and probability of positive events and lower the impacts and probability of negative events (Pmi, 2013). This makes risk management a crucial feature of project management procedures. In addition, Pmi has published a guide referred to as project management body of knowledge that shows major knowledge areas, which are key competencies for project managers. The link between these two aspects can be found within the context of eliminating negative effects in order to give room for successful project results.

3.3 Risk Management in Theory

Small and medium sized Enterprises are universally accepted as one of the crucial business avenues in the modern economies. Risks can be avoided through a well-organized system of management. The system assists in their identification and recommendation of how to handle the risks identified. For example, economic activities of most countries in Europe can be traced back to the operational activities of small and medium sized Enterprises. Additionally, as compared to other large-scale enterprises, Small and medium sized Enterprises can be said to possess very simpler internal organization structures, and in the process, they can as well be said to be more flexible in adapting and responding to change.

Simultaneously, based on the findigs of the reviewed articles, small and medium-sized enterprises are frequently faced with a number of adverse conditions. In this case, SMEs are known to make very limited profits when it comes to revenues accrued from economies of scale owing to the fact that most of them have limited accessibility to resources. Additionally, another potential reason why small and medium sized Enterprises in Saudi Arabia need to implement risk management strategies because they have very low equity ratio and this makes them very vulnerable to risks and external events than large-scale enterprises. In simple terms, from the reviewed articles, it is very clear that large enterprises are not the only ones that face adverse conditions. In simple terms, the survival of Small and medium sized Enterprises depends basically on how effective they can deal with the risks because they are easy targets due to their smaller set of resources and finances.

According to al-Mutairi, cornerstone and Dingwall (2015), management of risks may assist Small and medium sized Enterprises top management team to evaluate and identify significant risks that can endanger the existence of small and medium sized Enterprises in time to help cope with them. In this case, in case any company fails to recognize risks or rather if it fails to misjudge the extent of risks, then it is more likely to face disastrous consequences that arise from loss of customers, bankruptcy, environmental damage, and damaging liability. One sure thing based on the reviewed articles, is the fact that most of the Small Enterprises are not known to apply effective risk management practices basically because they are not in a position to rededicate resources due to resource constraints.

As much as the literature revolving around Small and medium sized Enterprises and risk management has been increasing in the modern era, it is argued that most of the literature is still fragmented and in the process, there is no evidence of a systematic literature review revolving around risk management in Saudi Arabia. In this case, such reviews may be deemed valuable owing to the fact that they integrate all the existing literature reviews and research works on the topic of study and present knowledge and ideas that are synthesized from which future research works can be built upon. From the analysis of the reviewed articles, it can be contended that the subject of hazard administration in Saudi Arabia as compared to other emerging countries can therefore be assumed to be a research gap that needs adequate exploitation.

Although in essence, there have been a number of literature reviews and research works about the success, it can be argued that at the moment, there is no significant progress that has been made so far. According to Azyabi and Fisher (2014), there is no enough acknowledge from researchers on the major challenges that are affecting Small and medium sized Enterprises in Saudi Arabia and other emerging countries. The major reason behind it is on uniqueness, qualities and objectives presented by Small and medium sized Enterprises coupled with the implications and influence caused by the industry type in which the Small and medium sized Enterprises are operating. Additionally, different expert opinions about small and medium sized enterprise success, as well as, the appropriate approach to the issue of risk management in Small and medium sized Enterprises have also played a crucial role in successful research about Small and medium sized Enterprises in Saudi Arabia. In other words, most of the reviewed articles concentrated on risk management in terms of financial measures without any tangible solution or agreement being formulated.

According to the findings postulated by al-Mutairi, Connerton and Dingwall (2015:480), various external and internal factors play a very crucial role in the success of risk management in Small and medium sized Enterprises in Saudi Arabia. These factors revolve around competition, enterprise culture, training, education, experience, entrepreneurial objectives and choices. Therefore, it is very important for small and medium sized Enterprises to be able to effectively establish measures that will see to it that all the elements that revolve around these factors are managed, examined and assessed for any potential risks or threats to ensure small and medium sized Enterprises survives in the market.

3.3.1 Risk Management Process

The different tasks of risk management are structured in a chronological process. However, there are similar definitions of the phases by different researchers. The definition found in the literature is different based on the way the task is ordered into three phases. Moreover, the wording is different, although the aim of all tasks in the entire phase is to enable a business to understand the risks it is presented to keeping in mind the end goal to have the capacity to oversee them (Triantis, 2000).Therefore, hazard administration procedure embarks on risk identification, analysis, evaluation or risk assessment and finally risk monitoring.

It is universally accepted that, a stringent risk management may help Small and medium sized Enterprises to cope with any kind of risks. Additionally, immediately the risks are identified, it is accepted that a number of approaches or techniques to deal with the identified risks should also be established. In other words, based on the concept paper written by Terungwa, 2012 the process of managing risks comprises of five distinctive steps mentioned above. Moreover, based on the findings on SMEs, it is clear that the five stages that were identified can as well be discussed exhaustively in request to give a reasonable comprehension of the idea. For example, in view of the contextual analysis report presented by Matthews 2013 it is argued that practices of risk management may sometimes be very informal which, according to the researchers they become challenging to implement and sometimes very difficult to share when it comes to the process of risk management building capacity. Nevertheless, Matthews (2013) established a number of examples of Small and medium sized Enterprises that employ a proactive technique to managing risks. Although there are various activities that take place in the process of risk management, the major ones involve the control of risk and managing the risk results (Berg, 2010). The risk management process also consists of four phases that are discussed below.

3.3.1.1 phase 1: Risk Identification

The primary aim of this phase is to identify risks that can interfere with the operation of a business. The identification of risk that can affect business is important because it determines the success of the remaining three steps of risk management. A business can use either the progressive or the regression approach to identify the potential business risks. Progressive approach refers to the identification of possible plan deviation based on risk factors while regressive approach involves the identifications of reasons in the various risk factors that can cause a deviation from the goals and objectives of a business (Berg, 2010). To identify all the potential risks that may interfere with the operation of the business, the management must be able to access all the required data and information. However, risk identification should not consume many of the business resources, as it is supposed to be cost effective.

In this phase, the very first step of managing risks based on the findings of Chong 2014, which should be conducted in a systematic way by identifying some of the possible risk and loss sources. According to them, the primary stages of risk identification revolve around first, systematic and continuous review of all information and data that associate with the business activities, assets and staffs. The second is through the employment of financial statements to establish potential financial risks and losses. The third is by using graphical presentations and flow charts to assess all business operations. According to Chong (2014), the identification of risks stage may hold on a very conclusive starring role in project management and planning of Small and medium sized Enterprises. Additionally, a number of research articles reviewed indicated that strategic project risks or rather those risks that can put an SME projects in danger should be ejected completely and in the process, more risk associated with the business operations should be analyzed as soon as they are identified. Nevertheless, Mäenpää and Voutilainen (2012), points out that efficient identification of risks may be made more challenging by the aspect of establishing risk management empowerment and capacity in workers. Additionally, a variety of articles reviewed indicated the fact that limited financial resources and inadequate technology coupled with their inability to deal with a number of risks simultaneously is also a major challenge for SME managers. In this case, it is recommended that all small and medium sized Enterprises should be able to identify all the available risks and threats, but immediately after analyzing the risks, they should try as much as possible to concentrate on the most significant ones and implement a training program for their workers on how to manage them. However, given the fact that most of the article reviews did not examine and exhaust the issue of risk identification in Saudi Arabia, it is thus very wise to recommend that further research and case studies should be done on Small and medium sized Enterprises in Saudi Arabia and the gulf region.

3.3.1.2 Phase 2: Risk Analysis and Evaluation

The identified risks should be analyzed and evaluated. However, it is relatively difficult to differentiate the first phase with the second phase because they are based on each other. However, for effective risk management, the identified risks should be categorized and evaluated (Berg, 2010). Risk evaluation is important, as it helps in the determination of the degree of the risks and the magnitude of its impact on the business. This determination can assist in determining the amount or level of energy or resources that can be directed towards its management for a continued and effective operation of an SME. It is important to categorize the identified risks, in line with field of risk, such as, market and financial. The categorizing of risks gives a business an opportunity to latter determine if the risks are related to one another and whether they offset one another.

The second phase of risk management also involves the evaluation of various influences and potential harms of the identified risks. Risk evaluation needs the identification of the financial impact in case the identified risk takes place. Many risk managers find it hard to quantify the impacts of risks because of the uncertainty of the future outcome of the risks (Berg, 2010). Therefore, risk management process is bestowed upon the estimation of the impacts. Businesses can either use the quantitative or qualitative techniques to estimate the impacts of the identified risks. Quantitative estimation involves the utilization of statistical techniques to simulate and forecast the occurrence and impact of the identified risks. The qualitative method involves the evaluation of the frequency and the effect of a risk based on experience of management and staff in an organization. The overall objective of estimation is to determine the potential loss that can occur if a risk occurs.

According to the findings of Mäenpää and Voutilainen 2012, the second stage when it comes to the issue of risk management is risk analysis. According to them, risk analysis is universally accepted as a technique of estimating and measuring the potential frequency of threats, losses as well as the implication of those threats to the operations of the business. In this case, it can also be assumed that the risks can also be ranked based on the importance or the threats they pose to the company operations or rather activities. In doing so, Chong (2014) believed that this process helps the company to establish risks based on their priorities and helps in the selection of the starting point when it comes to risk management approaches for each business threat. One primary element that needs increased consideration in risk analysis was pinpointed by an article by Marcelino-Sádaba et al (2014), and were of the opinion that, as much as risk analysis is crucial for SME managers as far as risk management is concerned, the problems associated with employee education may as well hinder the process of risk analysis. As a result, to deal with this issue, Chong 2014 recommended that only two variables could be employed in the risk analysis process. These two variables include probability and gravity.

3.3.1.3 Phase 3: Risk Control

According to Berge (2010), the third stage involves the evaluation of risk treatment measures in order to control the effect of the identified risks. It is important to note that the management always carries out risk identification while the staff always undertake the execution of the process. The risk control measures that are taken by many organizations include risk sharing, risk reduction, and risk acceptance. Berg (2010) stated that businesses could reduce the probability of occurrence of the risks through vital taking care of and reconnaissance. In any case, for the situation that the hazard cannot be decreased in an association, the outside gatherings are included and the lessening of hazard is gotten through the exchange of dangers to the outsider (Berg, 2010). Risk should be accepted if it is not risky and if the reimbursements from the insurance outweigh the costs. Controlling risks is a crucial step in the risk management process as inidated. This enables the business to ensure that the risks facing its operations remained contained all the time. Risk accepted if it is closely linked to the core business and its elimination is not possible. Many organizations use the mix of different risk control measure to undertake risk management effectively. As soon as the risks are identified and analyzed, Marcelino-Sádaba et al (2014:33) points out that they may be dealt with very differently. Some scholars such as Chong 2014 shows that the fact that a number of methods and tools can be employed in dealing with the risks associated with SMEs. In a qualitative research that was conducted by Marcelino-Sádaba et al 2014 on Australian SMEs showed that insurance is the most preferred mode of risk management. Nevertheless, in their study, Gao, Sung and Zhang, (2013), insurance comes at a cost and in most instances; it deals with those events that are unexpected. Additionally, to clarify further on the issue of insurance, Marcelino-Sádaba et al (2014) based on the qualitative study of 24 interviews in Britain argued that most SMEs always chooses insurance claims against floods, personal injury, fire and property damage. Moreover, Gao, Sung and Zhang (2013) were also of the opinion that, apart from offering protection cover against financial losses from adverse situations, insurance may as well play a very important role for SMEs irrespective of whether the SME that is insured does not necessarily suffer any losses. Based on their findings, it was clear that insurance might also be helpful for SMEs in establishing compliance with statutory requirements, downside risk analysis, as well as, management services. In the case of SMEs, these services are universally accepted as significant given that the fact that SMEs are not experts when it comes to these departments or rather area of specialty. In other words, even if the issue that the SME has been insured against does not materialize, then SMEs are set to benefit from insurance because they are forced to examine and analyze the risk.

The second risk management strategy has to do with weather derivatives. According to a study by Gao, Sung and Zhang, 2013 adverse weather conditions have forced so many SMEs hedge their chances of being exposed to catastrophes like tornadoes, droughts and floods with the assistance of what some scholars acknowledge as weather derivatives. Besides, the availability of financial instruments ensures that SMEs are able to transfer the risks and threats associated with weather to a third party. Besides, insurance, the SME owner is able to enter into a contract with the insurance contractor, which makes it possible for them to renegotiate the terms if the weather conditions are unfavorable. Nevertheless, Brustbauer, 2016 was of the opinion that incase of any changes in the weather conditions. It is argued that SMEs may be affected financially by approximately 80 percent.

Supplier selection is another approach used in risk management based on the reviewed articles. Brustbauer (2016) argues that SME can be able to enter into an agreement with individual product suppliers to influence the implication of the behavior of the supplier. In so doing, they are able to reduce and curb any form of risks associated with some suppliers. For instance, according to the implications and the findings of some reviewed peers sand articles, these contracts can be taken in the form of performance guarantee that needs constant product quality and in the process, it may incorporate penalties. Additionally, of the eleven SME managers interviewed in Denmark by Svensson et al 2015:950 indicated that they only concentrate on sourcing their products locally because the risks associated with political unrest currency and customer problems can be eliminated. Furthermore, the San SME manager in a study that was carried out by Weidman, Dickerson and Koebel (2011), about six SMEs in Canada and France confirmed the opinion that was passed across by Svensson et al (2015) by arguing that their firm only prefers those suppliers that possess a similar mentality. In the process, all the threats and risks associated with suppliers that are unknown to the firm were avoided. Overcapacity in production is also another risk management strategy. In this case, the findings by Bajo et al (2012) pointed out that excess capacity in SMEs production levels, safety stocks and excess capacity in warehouses can help verb risks in SMEs. Besides, the articles also indicated that this strategy is very effective with smaller companies as compared to large companies.

3.3.1.4 Phase 4: Risk Monitoring

The final phase of the risk management process involves monitoring and evaluation of the suitability of risk control measures used by an organization. It also helps in determining the success of risk identification, evaluation, and assessment. Risk monitoring should involve the development of risk positions and appropriate measures to control the identified threats (Berg, 2010). This is a crucial phase in the risk management process as it assists the involved parties to have a record of accomplishment of the risk being trailed. Risk monitoring is also important, when it comes to taking effective measures when there is a deviation between the actual and planned risk circumstances. Therefore, the final stage is important in determining the success of risk management. This process involves rather a regular analysis of the introduced risk management techniques to see to it that they are very much in line with the current business requirements. Svensson et al 2015 were of the opinion that SME should establish a way that will ensure that they are able to set up the performance criteria or standards in order to monitor the process of risk management continuously and more effectively. In this case, from the overall article reviews, it is also clear that there is no empirical research evidence as far as control stage of the process of risk management is concerned and therefore, this area requires more future research.

In contrast to the opinion that was presented in the research article by Razi and Madani, 2013 SMEs that were surveyed were established to be in possession of considerable financial reserves, which can be said to be made up of only of small stock and limited private financial resources. Additionally, as a limitation, it is wise to note that one of the reviewed articles by al-Akra, Abdel-Qader and Billah 2016 concentrated on the analysis of manufacturing companies that were found in Germany car industry. Thus, the findings of the research may be said to be specific to a particular industry in the nation that was examined. Based on the findings, it is clear that further research work and collection of information from other nations should be carried out to offer a more comprehensive insight to determine whether safety stocks would be a more essential risk management approach for SMEs.

The Emergency plan is also another potential risk management approach that was identified from the reviewed articles. In this case, Al-Akra, Abdel-Qader and Billah 2016 postulated that in case of any terrorist attack or potential natural disasters, it is very crucial for SMEs to have set up a contingency plan or a continuity plan. According to the article, the mentioned contingency plans revolve around how the SME workers may be able to evacuate the organization premises in case of any adverse condition or how the company may relocate temporarily. Nevertheless, a research work by Siddique (2014) established that SMEs being small in size have a very limited chance of having such a plan.

Cooperative relations/networking is another risk management strategy. According to the findings of Siddique (2014), SME managers are known to use their personal networks more frequently. In this case, close connection with the company’s customers and suppliers can also be considered as one of the strategies for risk management. Bauer et al (2016) also indicated that, besides personal connections, most small-scale enterprises keep in touch with existing clients in an effort of gaining frequent business operations with them. According to them, SME networks were a baseline for attracting new potential clients. Moreover, maintaining close connections with competitors was also established as one of the best ways in which SMEs can curb risky transactions because sharing information relating to the company with competitors may lead to data about credit-worthiness of potential prospective customers. Furthermore, a research study by Bauer et al (2016:13), which employed a qualitative approach, indicated that managers of SMEs tend to engage in a personal connection relationship whenever they hope to have a competitive edge in the future or whenever they perceive a risk in the relationship. To complement the above research works, Yousuf and Lawton 2012 established that networking is a risk mitigation strategy that has been employed more frequently by SMEs based on their research findings most especially when it comes to dealing with financial risks, technological risks and material risks.

As much as there are a number of risks of knowledge losses that were identified in most articles reviewed SME managers that were surveyed by Yousuf and Lawton (2012) indicated the importance of entrusting top management with the responsibility of risk management. In this case, the respondents were fully aware of the fact that valuable employees leaving the firm cause a risky situation and in this case, thus SME cannot realize the objective of mitigating such circumstances if it cannot delegate responsibility. Additionally, the interviewed SME managers by Mukhtar and Schiffauerova, 2016 the risk in this case arises with the management and selection of workers to whom the risk management responsibility is transferred. The mangers interviewed were of the opinion that, most of them tried as much as possible to learn and comprehend the personal skills, qualities and the employee ambitions through establishment of personal connections and networking. These qualities themselves were very crucial in identifying potential candidates who have no plans of leaving the company in the near future and in the process, mitigated negative implications.

According to the reviewed papers, books and articles, asset securitization was also identified as a risk management approach. In his conceptual article, Yousuf and Lawton 2012 indicated that securitization is a technique of managing adverse conditions in SMEs. According to him, he believed that securitization is a methodology that permits the issuer to transmit a number of risks such as interest rate, credit risk as well as liquidity risks to all the potential SME investors that are present in the capital market at what so many classify as a fair market price. Additionally, because it is accepted that it is very challenging foe SMEs to gain capital advantage because of its relatively small size, Mukhtar and Schiffauerova, 2016 was of the opinion that asset securitization will be a much better approach as compared to the ancient channels of external company financing. In this case, the conceptual paper clearly pinpointed out that, this strategy may assist in limiting the securitization differences as far as the cost and availability of credit in the major credit markets. Nevertheless, because of the fact that the opinions presented in the reviewed articles about securitization are based on conceptual ideas, testing and analyzing of their importance and applicability to real life business operations is an area that can be of much interest when it comes to future research.

3.4 The Concept of SMEs and Risk Management

SMEs are found in all parts in the world, but there is no universal definition of SMEs due to practical considerations. Therefore, the definitions of SMEs vary from one country to another, as they have different classifications. Some states define SMEs based on the number of workers while other based their definition on the value of assets (Rogowsky, 2010). According to Aziz and Yazid (2015), the lower employment limit for small businesses varies between five and ten employees and the upper limit is found between 50-100 workers. Besides, in many countries, the upper limit for medium enterprises is between 100 and 250 workers. However, it is still difficult to have a universal definition of SMEs because their description is also pegged to the size of the market or the economy of a given country. For instance, any firm with about 50 workers in the United States of America is considered small (Rogowsky, 2010).

According to section 382 and 465 of the UK companies’ act of 2006, an SME is defined based on its assets and the number of workers (Ward, and Rhodes, 2014). In the UK, any business with less than £3.26 million turnover and employs less than 50 workers is considered small. However, according to Sefiani (2013, firms with less than £25.9 million turnover with less than 250 employees is considered to be medium. Therefore, the definition of SMEs varies from one country to another based on their economic development and market.

However, in the case of Saudi Arabia, the definition of SMEs differs from one entity to another. According to the SME development center, SMEs with less than 20 employees is taken to be small while those with between 21 and 100 are considered to be medium (Al Saleh, 2012). Nevertheless, the general investment authority in Saudi Arabia defines small enterprises as those with less than 60 employees while medium firm have not more than 100 workers. Saudi industrial development fund, on the other hand, defines SMEs as those whose annual sales are not more than sr20 million (Al Saleh, 2012). The table below summarizes the current definition of SMEs in Saudi Arabia, which is the most adopted definitions of SME in the country.

Table 1: Definition of SMEs in Saudi Arabia

Enterprise category	Number of employees	Annual revenue (USD)
Micro	1-2	Less than 27,000
Small	3-49	27,000-1.3 million
Medium	50-200	1.3-13.3 million

According to Onugu (2005), SMEs can be distinguished from large enterprises based on the size and the nature of management structure. In many SMEs, one of the owners of the business constitute constituted parts of the management. The owner uses his or her intuition and experience to manage the company. Therefore, unlike large companies, the owners of small businesses double as managers and they are responsible for many decisions and activities taking place in the enterprise (Onugu, 2005). Many SMEs do not have enough resources to employ different specialists to carry out different functions in an organization. The owners of SMEs are responsible for any planning and risk management. However, the managements of such enterprises do not have enough time, appropriate management system, and deep theoretical knowledge to understand the environment in which their businesses operate. Consequently, a significant number of SMEs do not have a structured and standardize the risk management process.

Siregarand Wiryono (2015) stated that risk management techniques that are used by large companies do not apply to SMEs. Even though both small and large companies face almost an equal number of risks, they have different risk management practices. Many studies have found that many SMEs have explicit risk management practices and they rarely take their time to identify, evaluate, and assess the risk that they are likely to face (Siregarand and Wiryono, 2015). A study that was carried out by Siregarand and Wiryono in 2015 on risk management in SMEs found that 40% of small companies do not take the time to identify risks while 64% lack the techniques and expertise to properly carry out risk evaluation. Many SMEs, owners also believe that large companies should only do risk management. Studies have shown that as the size of small and medium sized enterprise is increasing its chances of using elaborate risk management practices also increases. Belás et al. (2015) argued that the size of a firm also influences risk management practices that are adopted in an organization with large SMEs more likely to use one method than small enterprises. SMEs, therefore, do not employ the use of comprehensive risk management practices that their larger counterparts. They rely on the knowledge and expertise of the owner who also acts as managers of the enterprises.

3.5 Risk Management and Performance in SMEs

A number of studies show that firms that perform better take risk management seriously when carrying out their activities and implementing policies. A study by gates et al. In 2012 showed that there is a significant positive relationship between organizational performance and risk management (Lukianchuk, 2015). However, in order to enhance the performance, companies should not only focus on risk variables, but also the risk management practices and models. However, some researchers found no positive relationship between risk management and organizational performance.

In 2012, Baxter et al carried out research to determine the impact of enterprise risk management on the business earning, and they found that there is no significant relationship between the two variables (lukianchuk, 2015). In order to boost the performance of Small and medium sized Enterprises, their owners should focus on three main objectives that include safeguarding resources, effective operations, and strategic management (Channar, Abbasi and Maheshwari, 2015). Therefore, there is a controversial debate on the relationship between small and medium sized enterprise performance and risk management.

There is a little separation that is shown by Small and medium sized Enterprises among the entrepreneur’s strategic thoughts, decision-making, and enterprise formal planning system. According to Mckierna and Morris (1994), it is notable that Small and medium sized Enterprises are featured with the key role of multiplicity and owner’s duties and close identification with employees. The firms that are in the start-up phase in most cases underestimates risks or even ignores it completely. The upcoming Small and medium sized Enterprises frequently are faced with a high degree of uncertainties and the need to undertake quick decision. Scholars in this area have shown that Small and medium sized Enterprises attitudes towards risk and the risk assess Small and medium sized Enterprises done differs significantly compared to those of large firms.

Risk management is not an easy task for Small and medium sized Enterprises as contrasted to large organizations due to limited or lack of crucial resources in respect to human capital knowledge specify to undertake structured and standard risk management. According to Matthews and Scott (1995) argument Small and medium sized Enterprises are not in possession of the essential resources to acquire experts at each position in the firm. However, the major focus is drawn towards the core business and administration function generalists. In small and medium sized enterprise, the business owner is in most case part of the administration. The proprietor instinct and experience are noteworthy in the firm management. Consequently, diverse tasks and crucial decisions are a responsibility of the owner-manager figure.

The risks in Small and medium sized Enterprises connect to the attitudes and beliefs for the founding entrepreneurs. These enterprises do not seem like they apply special techniques in the process of optimizing important risks. Literature that is connected to risk management in Small and medium sized Enterprises is not adequate and is in its early development where a small lot of studies have been directed towards risk and risk management section. According to Janney and Dess (2006), these enterprises are not close to accommodating an approach that is positive towards risk management. This sis based on the limitations such as insufficient infrastructure, lack of enough technical and managerial professionals, absence of financial and intellectual lack of strong information networks that can assist in the location and recognition of information and knowledge. Some of the lacking resources assist in the generation of technological developments that are substantial to the growth and development of an enterprise, In the other study, Turpin (2002), argues that a large number of Small and medium sized Enterprises does not contain an official risk strategy which results from communication problems and a delegating risk management competency to employees. A close analysis of this study shows that the researcher notes that an increase in competition, competitors low competencies transforming customer demands, wrongly approached strategies that result from lack of personal absences and market data are regularly and most essentially risk for Small and medium sized Enterprises. There is no explicit picture among the Small and medium sized Enterprises with respect to risk management and business risk and in most cases, the approaches followed are no standardized or structured in a systematic way. According to Henschel (2008), lack of professionals and knowledge in Small and medium sized Enterprises can result in big business risk among these firms. Additionally, the enterprises recognize two risk assessment barriers namely accessibility to suitable guidance and time pressure. The implication is that once small and medium sized Enterprises are given asses in an appropriate guidance, they can be able to improve efficiency in risk management. In another case, sparrow (1999) feels that the founding entrepreneurs’ beliefs and attitudes have great influence on the practices of risk management in the Small and medium sized Enterprises. Therefore, decision-making is approached in terms of business as an entity and not in the context of managing precise risk. These enterprises during their start up time, they in most case underestimate risk or even ignore it fully. It is important to note that the startup phase of Small and medium sized Enterprises typically force in a high degree of uncertainty and the need to make a speedy decision. In addition, a more empirical study in this shows that the Small and medium sized Enterprises attitudes towards risk and its assessment have significant differences compared to that of large enterprises given that considerations of Small and medium sized Enterprises involve a more holistic way.

3.6 Risk Management Tools and Techniques

3.6.1 Risk Management Approaches

There are two key approaches towards risk management that can be used by the organization to deal with the threats that they face in their areas of operations. The approaches include "top-down" and "bottom-up" approaches.

3.6.1.1 The Top-Down Approach

The top-down approach deals with risks from a corporate perspective. The approach identifies and analyzes the risks in every department in an organization with respect to the interconnection of risk terms that are found in the whole organization (Smit, 2012). In the case of top-down approach, the top management always initiates the risk management process. However, it is the staff that actively takes part in the implementation of the risk management process. The top-down risk management process has five main stages that include:

· Risk identification: this first stage involves the identification of risks that affect the organization, especially through the use of information that is available in the public domain. The identified risks are then communicated to the staff that is tasked with the responsibility of identifying the internal risk that can affect the organization.

· Risk evaluation: the identified risks are analyzed at this stage in terms of their chanced of occurrence and the potential impact.

· Risk profiling: the stage involves the grouping of risk into various categories based on their probability and the severity of their impacts. The risk profiling information helps in coming up with risk mitigation strategies

· Risk quantification: risk quantification involves the estimation of the real losses, the frequencies of occurrence, and the confidence limits of the identified risks.

· Risk consolidation: in this final stage, the subsidiary risks that have been identified are elevated to the corporate level through the use of mathematical process or a group of qualified staff who undertake subjective risk profiling analysis.

3.6.1.2 The Bottom-Up Approach

This approach involves all employees found in an organization. According to Smit (2012), bottom-up approach is based on the fact that the occurrence of risk should be managed as close as possible in order to minimize its potential effects on the operations of an organization. Consequently, all workers should be involved based on their roles and responsibilities. Bottom-up approach is important because it enables the management to receive accurate information that it can be used to make up decision on how to mitigate risks (Smit, 2012). However, it is important for an organization to integrate bottom-up and top-down approaches in order to come up with optimal risk information that can help in effective risk management.

The evaluation and identification of risks can be undertaken with formal and informal tools and techniques. The choice made by any enterprise management gains control over its risks. However, there is no set in stone there are numerous risk management tools and techniques in place. In line with the stages that are undertaken during risk management, there are some already established tools and techniques for each stage as discussed below.

3.6.1.3 Risk Register

This is the mother of all other tools and techniques and helps to track the risks all through the project lifecycle. They are normally excel spreadsheets and are useful for providing information for lessons learned. To be able to identify risks successfully, it is important to consider each possible eventuality (Patterson, and Neailey, 2002). However, the issue is that there are some things that an enterprise management would not know. in such a case that is when tools discussed below needs to be applied in order to assist in the discovery of hidden risks. The enterprise manager or a project manager can view the database of a risk register whereas a management tool assists in monitoring of risk management procedure within the enterprise operations. This tool can be used to identify, assess and in the management of risk and lower it to the acceptable levels through a process that involves updating and reviewing process. The major resolution of risk register in risk management is to keep a record of the details of the entire lot of risks that have been noted with their analysis and plans on how the risks will the treated and handled. The manager or management has a responsibility to make sure that the risk register remains up to date whenever it is deemed necessary. This sis a task that is in most cases delegated to the project control function. It is also important to note that for the tool to remain effective, those risks that have been avoided or do not exist or relevant to the enterprises can be removed from the tool furthermore; the action plan can be removed as well from the register. In addition, the list of the already identified risks and recorded in the risk register initiatives the following risk management processes as discussed in the risk management process:

3.6.1.4 The Delphi Technique

The technique was developed by Dalkey and Helmer in 1963 and is widely applied and an acceptable method of attaining opinions convergence regarding real-world knowledge that is solicited from professionals within a particular topic area. It is notable that the technique is widely acceptable as a method for collecting information from respondents within their domain expertise. Furthermore, it is designed as a group communication procedure with an aim of achieving an opinion convergence on a certain real world issue. This process has been applied in a variety of fields of study like the policy determination and resource allocation, in exploration of underlying assumptions within a wide range of disciplines. Among all these areas, the risk management among small and medium sized enterprises are one of them. The technique is situated as a method to assist in consensus building through the application of a series of questionnaires that are delivered through the use multiple iterations to collect data from a panel of selected subjects. In additional, it involves situations, where a panel of experts are asked, and give answers to a questionnaire in a series of rounds. The key idea is questioning deeply enough and collect unbiased data that is agreed on by experts (Dalkey, 1972). The design technique is informed of a group communication procedure aimed at conducting detailed discussion and examination of a certain issue for goal setting, purpose, policy examination or prediction of the future occurrence of events (Ulschak, 1983). In joint surveys, efforts are made to identify or address what could and could through Delphi technique (|Miller, 2006). In the case of Small and medium sized Enterprises, Delphi technique can be applied in program planning, determination of better business policies and resource utilization.

3.6.1.5 Root Cause Analysis

The RCA is a technique designed in a manner that enables it to be used in the categorization and investigation of the root cause of events with safety, quality, reliability and the production effects. In other words, it's all about looking for the main cause of a problem and defining whether the entire effects can be prevented or not (Rooney, and Heuvel, 2004). The design of an RCA tool is based on assisting in the identification of what and how and the event took place and the reason why it happened. The key point here is all about going after the cause of a risk, for instance, financial constraint, and then suggest a measure that an SME can apply to solve the issue. The tool has been applied by these enterprises with an aim of getting to the major cause of financial constraint. Some of the major causes could be reduced cash flow ration and try to define what causes it, then help the management to come up with a lasting solution to the cause of the risk which translates to having the whole issue solved from the source. The investigators can be able to specify a corrective measure that is workable only when they manage to determine why an event took place for future events (Mainardi, 2005). For instance, once an enterprise manages to determine the root cause of financial distress they can come up with corrective measure to ensure that such a risk is not experienced at all in the future operation of the business. This implies that understanding the reason why an event took place is crucial to developing effective recommendations.

3.6.1.6 Failure Modes and Effects Analysis (FMEA)

This is small and medium enterprise trial method where potential failures of a process design are identified, analyzed and documented. It is an evaluation aimed at determining where and how a procedure may fail. Once the effects are identified, what follows is the required performance and recognition of safety, and the taking of appropriate actions in order to eliminate the impacts of the failures identified (Robertson, and Shaw, 2003). An FMEA is an important reliable tool that assists in avoidance of costs incurred from failures of a product and liability. The FMEA is a continuous bottom-up approach that is utilized within three areas of product realization namely. These areas include; design, service, and manufacturing (mil-STD-1629a). The tool examines products failures that are potent and the impacts of the failures to the customers while within the manufacturing process the examination is basically on the variable that has the likelihood of affecting the quality of the process. The key aim of FMEA is to act as a preventive measure of the misuse and misrepresentation of the tools and materials applied in the service of a product. Small and medium sized Enterprises that can be able to adapt the process of FMEA will typically apply and adapt the procedure to attain their certain needs. In conclusion, it is noted that tools and techniques that are not used effectively will not help with the process of risk management. It may take longer for an enterprise to find a tool and technique that suits its operations.

3.6.1.7 Enterprise Risk Management (ERM)

There is a difference between ERM and the traditional risk management in that the former concentrates on the high-level oversight of business whole risk portfolio rather than managing risks in isolation. Smit (2012), argues that the traditional risk management only focused on hazard risks with its main strategies focusing on insurance. However, changes in the business environment such as the adoption of computer technology, high demand for corporate reputation, and emergence of new business models led to the development of ERM (Smit, 2012). The ERM is based on the premise that it is the responsibility of organizations to give value to all their stakeholders. ERM enables an organization to deal with the uncertainties while at the same time improving the business's capacity to create value.

According to Smit (2012), ERM has three main characteristics that make it more effective than the traditional risk management. One very first thing to note about this tool is that it is an integrated approach to risk management making it operational within the business environment. Secondly, it is comprehensive because it includes all types of risks that a business is likely to face during its operations. ERM is also strategic, as it is aligned with the business strategies and the overall goals and objectives of an organization.

3.6.1.7.1 ERM Approaches

1. Measurement-driven approach: this approach focuses on the identification of key risks that are likely to be faced by an organization. The approach takes into consideration the materiality and chances of occurrence of the identified risks. The management of a business, therefore, pays more attention to key risks (Smit, 2012). However, the approach may be disadvantageous because due to the escalating nature of risks. The insignificant risks that have been ignored in this approach a series of events that can lead to significant risk. Therefore, the measurement-driven approach can lead to the escalation of risks rather than preventing the threats.

2. Process-control approach: the approach pays more attention to business processes and the risks associated with the operations of business. The aim of the process-control approach is to help in the formulation of informed decisions by considering all the activities taking place within the organization (Smit, 2012). The approach does not categorize risks based on their materiality, but it focuses on the management of the process

3.7 The Common Risk Management Technique

Avoidance of risk: avoidance of the identified risk is the easiest risk management technique, which is majorly applied by small businesses. Risk avoidance occurs when an organization refuses to engage in activities that are associated with certain risks. A study that was carried in the UK showed that risk avoidance techniques are stifling the growth of many Small and medium sized Enterprises in the country. The same study found that a significant number of small businesses more Small and medium sized Enterprises in the country are spending more time in analyzing their potential risk after that financial crisis that occurred between 2008 and 2009. Despite the fact that the risk avoidance is the simplest method that business applies to manage the potential risks, studies have shown that it can lead to loss of revenue.

Risk mitigation: a significant number of businesses choose to manage their risks by reducing the threats that may affect their operations. The risk mitigation technique is meant to minimize the negative effects of a risk if it occurs. Many businesses apply risk mitigation techniques in the cases where the identified risks cannot be avoided.

Transfer of risk: sometimes businesses are forced to transfer risk away from organizations. Many organizations use insurance companies to transfer risks through payment of premium in exchange for protection, especially in case of financial loss.

Risk acceptance: risk management can also be executed through acceptance of the identified risks.

3.7.1 Diversification

Many small and medium sized enterprise owners run more than one business, which they use as a strategy to risk management. However, studies have shown that small and medium sized enterprise owners have problems with their diversification, mainly due to lack of appropriate managerial skills. A study that was carried out by Njau in 2010 revealed that many small and medium sized enterprise owners operate more than one business as a strategy to manage the potential risk, but they have experienced limited growth due to lack of managerial skills (Florescu, Barabaş and Barabaş, 2015).

3.7.2 Insurance

A significant number of Small and medium sized Enterprises use insurance to manage their risks. Small and medium sized Enterprises transfer their risks to insurance companies so that the business can remain in the current state even if a risk occurs. However, the use of insurance is not common among Small and medium sized Enterprises that operate in the developing countries, as a number of their owners lack clear understanding of how insurance operates (Raanan, 2015). Therefore, the use of insurance is only common in the developed economies as opposed to developing countries.

3.8 Risk Management Frameworks

Hopes et al. (2014) argued that risk management framework provides accepted practices that are required for effective risk management. In most cases, the risk management framework defines the risk management activities, but it does not go step further to specify how the activities should be carried out. Therefore, risk management framework only assists in providing comprehensive risk management techniques and the foundation for evaluating and enhancing the program risk management activities. In addition, the risk management program can be used to help the management to come up with different ways of dealing with the emerging risks (hopes et al., 2014). The framework can be applied in almost all phases of the system in an organization. The primary objective of risk management framework is to clearly specify the key sequence of activities that have to be implemented when it comes to risk management. Therefore, the risk management framework always has three main phases that include preparation for risk management, executing risk management activities, and sustaining and enhancing risk management.

The three main common risk management frameworks include EWRM (enterprise-wide risk management), COSO (committee of sponsoring organization), and FERMA (Smit, 2012). The focus of EWRM is to provide a guideline for organizations regarding the identification of risks; risk assesses small and medium enterprise, and different risk control techniques. COSO provides a framework that provides recommendations for main risk management activities and different guidelines that can be used for internal support. FERMA that was jointly formulated by the institute of risk management (IRM) and the national forum for risk management helps in the provision of the framework that can act as a guideline for ERM.

3.8.1 COSO Framework

The COSO framework was developed by the committee of sponsoring of organization of trade way commission (Mestchian, Makarov and Mirzai, 2005). The framework was developed to assist businesses and other non-profit making organizations to evaluate and improve their internal control mechanism. The COSO framework was further developed to enable the management of various organizations to enhance their enterprise risk management. It was aimed at providing key principles, concepts, and clear guidance on risk management (Mestchian, Makarov and Mirzai, 2005). The framework was designed based on the assumption that all organizations face uncertainties, which make the management to face challenges in determining the level of uncertainties to accept to boost shareholder value. It also assumes that the uncertainties contain both risks and opportunities. COSO is the most common framework that is used by many Small and medium sized Enterprises in risk management because it focuses on the internal operations of the business. The system also provides an effective internal control system, which can help in the mitigation of risks and achievement of the set objectives. According to the framework, it is difficult to separate risk and control, which means that the risk must first be identified before being assessed and managed through a strong internal control system.

COSO has eight related components that should be followed by the management during the risk management process. The eight components include the internal component of an organization, the setting , objectives, risk identification, and risk evaluation. Other components include risk response, controlling of activities, communication, and monitoring.

1) Control environment: this is the major component of the internal control mechanism, as it helps in establishing crucial discipline and structure. The components provide the basis on how risks are viewed and dealt with by various personnel found in an organization. The component is further subdivided into soft and hard control. The soft control includes factors like ethics, morals, commitment, and management styles. The shift control, on the other hand, includes organizational structure, policies, organizational practices, and assignment of responsibilities (Mestchian, Makarov and Mirzai, 2005). Studies have shown that organizations perform better when the management is dedicated to strong internal control, which they show through actions.

2) Risk assessmall and medium enterprisent: the component involves risk analysis where the likelihood and impact of risk are determined to enhance effective risk management. The component also includes the assess mall and medium enterprisent of internal and external risk. Therefore, the model takes care of the emerging issues in the business environment.

3) Control activities: control activities include policies, procedures and other practices that that helps in the achievement of the set goals and objectives. The activities also ensure that risk management strategies are effectively implemented to mitigate the identified risks. The activities take place in the entire organization.

4) Information and communication: appropriate information is identified and then timely conveyed to enable employees to properly undertake their duties. The information system in an organization should be integrated with the goals, objectives, and the strategies. In addition, the type of technology that is used in the organization must ensure quality information that can be used in decision-making. Besides, there should be effective internal and external communication that cut across all entities.

5) Monitoring: the component involves the external oversight of the management. The management should monitor the internal control to ensure that there is quality performance within the system. However, the deficiencies that have been identified in the internal control should be reported to the top management.

6) Objective setting: the management must first come up with the objectives before identifying the threats that can affect its operations. The objectives must be in line with the mission and the risk appetite of an organization.

7) Event identification: both internal and external events that can prevent an entity from achieving its objectives are identified. At the same time, the management should be able to distinguish between opportunities and risks. The identified opportunities should be channeled back to the organization's strategy.

8) Risk response: finally, the management chose risk responses such as avoiding, accepting, mitigating or sharing the risk. It also creates a set of actions to link them with the business's risk tolerance and appetite.

3.8.2 Advantages of COSO Framework

3.8.2 .1 Effective and Efficient Audits

The COSO framework can cause an effective audit due to its high level of risk assessment in small and medium enterprise and their analysis. At the same time, the framework has elaborate and enhanced design and performance to deal with the risk. It also gives the risk auditor and opportunity to concentrate on areas with the greatest level of risk misstatement (Mestchian, Makarov and Mirzai, 2005). It addition, it provides a better foundation for identifying the nature, timing, and degree of further assessing the potential risk. COSO framework provides a broader view of the risk and the environment that helps in saving time.

3.8.2 .2 Provision of Value Added Services

The use of the COSO framework gives the management additional opportunity of getting more knowledge of the needs of clients, the available competitive advantages, and other business risks. Therefore, it helps in the expansion of the knowledge of the people involved, which helps in the provision of better services and formulation of effective organization's strategy.

Other advantages of using the framework include:

· Strengthening the business ability to access the capital markets

· Enhanced control activities within an organization

· Assist in attaining performance and profitability target

· Ensuring appropriate and effective reporting and adherence to rules and regulations.

However, there are also some challenges that are associated with the COSO risk management model. The framework is based on human decision-making and human judgment can be erratic and faulty (Mestchian, Makarov and Mirzai, 2005). Therefore, human error can be costly to an organization and care must be taken when using the framework in risk management. The framework also has a limitation in the eight components do not apply to all organizations, especially when it comes to Small and medium sized Enterprises. However, the Small and medium sized Enterprises can still be able to use the framework as much as the components are present and functioning properly.

3.10 Conclusion

There is enough literature that discusses the concept of risk and risk management in Small and medium sized Enterprises. However, the literature majorly focus on the risk process and types of risks that face Small and medium sized Enterprises in general without narrowing to specific countries. Therefore, there is limited research on the risk management in Small and medium sized Enterprises in specific countries. Also, there is hardly any literature discussing the risk management in Saudi Arabia, as the only available books, journal, and articles only concentrate on the state of Small and medium sized Enterprises in the country such as the challenges facing Small and medium sized Enterprises and what the government is doing to improve their growth. Consequently, there is limited information on the risk management framework that can effectively apply to SMEs in Saudi Arabia. Therefore, there is a need for more research on the risk management SMEs, especially in Saudi Arabia to provide enough information that can be used to develop risk management frameworks.

CHAPTER FIVE: DISCUSION OF FINDINGS

4.1 Economic Framework that Small and medium sized Enterprises in Saudi Arabia Operate In

4.1.1 An Overview of Small and medium sized Enterprises in Saudi Arabia

Small and medium sized Enterprises are believed to be the backbone of every economy in both the developing and the developed countries. Even though Small and medium sized Enterprises are believed to be serving the local market, some have been able to exploit the international markets due to increased globalization and advanced technology. There is a high presence of Small and medium sized Enterprises in Saudi Arabia, especially due to economic strategy to diversify away from the oil sector that has been the main contributing factor in the Middle East economies. Small and medium sized Enterprises comprise about 90% of all the businesses in Saudi Arabia and almost 85% of these enterprises fall under sole proprietor companies (Al Saleh, 2012). The Saudi Arabian government believes that it can use Small and medium sized Enterprises to unlock the economic potentials of the country.

Small and medium sized Enterprises in Saudi Arabia are majorly found in the private sector. It is notable that about 74% of Saudi Arabia SMEs operate in the trade and construction sector, which is followed by the sector that stands at 12%. The table below summarizes the distribution of Small and medium sized Enterprises in various sectors in Australia.

Table 2: Small and medium sized Enterprises Distribution in Numerous Sectors in Australia

Sector	Percentage
Commercial and hotel	47%
Construction	27%
Industrial	12%
Social services	8%
Others	6%

Even though Saudi Arabia is rated as one of the fasted growing economies in the world, it is small and medium sized Enterprises have lower contribution to the GDP and employment rate. The contribution of Small and medium sized Enterprises to GDP in Saudi Arabia remains at 33%, which is moderately low contrasted with other industrialized economies in the economies in the world. For instance, the contribution of Spain and USA Small and medium sized Enterprises to the GDP stands at 63% and 50% respectively. However, the Saudi Arabia Small and medium sized Enterprises contribution to GDP is higher than many developing countries and other countries that fall within the GCC. For instance, Oman and Bahrain small and medium sized enterprise contribution to GDP stands at 14% and 28% respectively. Small and medium sized Enterprises in Saudi Arabia employ about 4.5 million workers, which is about 25% of the country’s labor force. However, these Small and medium sized Enterprises mainly employ migrants because they concentrate on the commercial and construction sectors of the Saudi Arabian economy. In less than 10% of the Saudi Arabian nationals are employed by Small and medium sized Enterprises found in the country.

Small and medium sized Enterprises in Saudi Arabia face a number of challenges that threaten their operations and survival. Lack of finances is the main challenge facing small and medium sized Enterprises in Saudi Arabia, as commercial banks in the country are not willing to lend them money to expand their businesses. According to Hana (2015), commercial bank lending to Small and medium sized Enterprises comprise only of about 2% the total bank lending in Saudi Arabia, which is moderately low contrasted with those of the rising nations that stand at an average of 20% and advanced countries that have about 25%. Consequently, Small and medium sized Enterprises in the country lack adequate resources to carry out innovative activities and other important managerial practices like risk management.

Hana (2015) argued another issue facing Small and medium sized Enterprises in Saudi Arabia is the short lifespan where they last for averagely seven years. The short life span of Small and medium sized Enterprises in Saudi Arabia is associated with lack of continued support from financial institutions and the government. Despite the fact that some initiatives have been developed by the Saudi Arabia government to assist in the development of Small and medium sized Enterprises, the initiatives have not been tailor-made to meet specific needs and demand of Small and medium sized Enterprises (Hana, 2015). Apart from subsidized loans that they receive from financial institutions, the institutions should come up with training programs for small and medium sized enterprise owners (Albloshi and Nawar, 2015). The training institutes in Saudi Arabia are charging high fees that cannot be afforded by many Small and medium sized Enterprises’ owners, as they charge an average of $3000 for short-term business courses. As a result, many people running Small and medium sized Enterprises lack basic entrepreneurial and management skills that they need to successfully manage their businesses.

4.1.2 The Role of SMEs in Saudi Arabia Economy

The role played by small and medium-sized enterprises in the economic growth, and sustainable development is great in every nation and, in this case, Saudi Arabia. These enterprises play a key role in the social, economic development of Saudi Arabia. The sector is among the key pillars of the country’s economy where many citizens depend on for livelihood by providing a solution to employment issues within the country. According to CBN (2011), these enterprises are crucial in the development of any economy following the fact that they possess great employment potentials, local technological development, and diversification in terms of output indigenous entrepreneurship development as well as forwarded integration with large firms. A small and medium enterprise potential benefit involves a commitment to the economy with regards to the yield of products and ventures employments creation at a moderately low capital cost, the foundation of a vehicle for diminishing pay aberrations, advancement of a pool of Skilled and semi-gifted specialists as a reason for future modern development. However, the importance of SMEs to numerous economies, according to the literature reviewed is that these small and medium-sized enterprises continue to face numerous challenges and risks that interfere with their growth and usually result into their closet. Starting and operation of an SME culminate possibility of success as well as failure and because of their small nature a single managerial mistake and hence no any opportunity to learn from previous mistakes. On the other hand, lack of proper financial and effective management styles have been posted as the major causes of failure among smaller enterprises. In addition, unavailability of credit has also been identified as a contributor to the constraints that SMEs face and which hinders their growth.

4.1.2 Saudi Arabia Effort to Bolster Small and Medium Sized Enterprise growth

According to Fallatah (2012), the Saudi Arabia government has realized the importance of Small and medium sized Enterprises to its economic growth and development, and it has come up with a number of initiatives to boost their growth and sustainability. The government of Saudi Arabia came up with the tenth development plan that is expected to run between 2015 and 2019, which has the primary objective of boosting small and medium sized enterprise growth in the country. The plan established special institutions that have the mandate of ensuring the growth of Small and medium sized Enterprises. It also came up with the Kafalan program in 2006 that provides loan guarantees to various Small and medium sized Enterprises. The program has not only issued guarantees to Small and medium sized Enterprises, but it also trains and educates small and medium sized enterprise owners in connection with international financial institutions like World bank. By 2013, the Kafalan program had guaranteed 58% of Small and medium sized Enterprises in the construction sector and 15% in the commercial sector (Fallatah, 2012). In addition, it had guaranteed 10% and 8% in the industry and the finance sectors respectively. However, the banks that were participating in the Kafalan program tightened their lending rules in 2014 due to obscure financial statements. Consequently, the financial lending to Small and medium sized Enterprises in Saudi Arabia has relatively reduced despite the implementation of the Kaflan program.

Other initiatives that have been introduced by the Saudi Arabian government to boost small and medium sized enterprise growth in the country include centennial fund, Saudi business incubator network, and women’s incubator training center. The centennial fund was established in 2004 to assist youth in Saudi Arabia to attain financial independence by enabling them to venture into business. The initiative became a professional economic tool that helps in the employment of young people while at the same time it helped the Saudi Arabia economy to diversify small businesses. The initiatives have helped in boosting the small and medium sized enterprise growth and sustainability in Saudi Arabia (Hana, 2015. However, in Saudi Arabia, mostly of small and medium sized Enterprises purports focus on financial support, and they ignore the training aspect, a factor that has led to the collapse of many Small and medium sized Enterprises in the country.

4.1.3 Comparison of SMEs in Saudi Arabia and Other Countries

4.1.3.1 Comparison with Economies in MENA Region

Rocha et al. (2011) argue that there are a number of socioeconomic challenges facing MENA regions, which end up affecting the small and medium sized enterprise growth in its member countries. Some of the challenges facing the region include increasing youth population, a high rate of unemployment, and unstable economic development (Rocha et al., 2011). As a result, the region is committed to boosting small and medium sized enterprise development to help it solve some of the challenges that it is facing, especially when it comes to job creation.

However, despite the need and interest in small and medium sized enterprise growth and development in the region, the region is still less effective when it comes to the favorable business environment to encourage entrepreneurship. A significant number of Small and medium sized Enterprises in the region still face various barriers that negatively affect their growth and sustainability. Like small and medium sized Enterprises in Saudi Arabia, those in the MENA region also face limited access to funds and lack of managerial skills (Bouazza, Ardjouman and Abada, 2015). Nevertheless, the region is better off when it comes to average share of small and medium sized enterprise lending that 8.19% compared to the Saudi Arabia average of about 3%. Still, 63% of the Small and medium sized Enterprises in the region find it hard to access finance. Therefore, Small and medium sized Enterprises in MENA region where Saudi Arabia falls face almost the same challenges, especially when it comes to financing and managerial skills (Emine, 2012). In addition, Small and medium sized Enterprises in the region face hurdles like ineffective policy environment, inadequate education program, and lack of sustainability quotient.

Figure 1: Small and Medium Sized Enterprise borrowing in MENA Countries

(dalakian, 2013)

4.1.3.2 Comparison with other Countries in GCC

Emine (2012) argues that like many oil-producing countries in the world, GCC is also relying on Small and medium sized Enterprises to diversify its economies that initially depended on oil. As a result, they have come with strategies to promote skills and entrepreneurship. Like in MENA region and Saudi Arabia, Small and medium sized Enterprises in GCC also face the same challenges such as the inability to access finances and managerial skills. Large companies that attract commercial lending dominate the oil-based economies in GCC. Therefore, the financial institutions in the region are not willing to lend to Small and medium sized Enterprises that have obscure financial statements. According to research by Al Barwani et al. (2014), in GCC, it is UAE that has the largest number of Small and medium sized Enterprises, and it is followed by Saudi Arabia. The small and medium sized Enterprises sector in UAE accounts for 60% of its entire economy and small and medium sized enterprise contribution to GDP is 46% compared to that of Saudi Arabia that stands at 33%. Both Saudi Arabia and UAE are coming up with initiatives that are aimed at easing the capital funding for Small and medium sized Enterprises. 92% of Small and medium sized Enterprises in Saudi Arabia find it hard to access funding for their enterprises while only 49% of Small and medium sized Enterprises in UAE are struggling to secure funds to start or expand their businesses (Barwani et al., 2014). Therefore, the small and medium sized Enterprises sector in UAE is more developed and advanced compared to that of Saudi Arabia. Generally, the main challenges facing the growth and development of Small and medium sized Enterprises in GCC include administrative hurdles, lack of effective, enabling laws and regulations, scarce financing, and poor management, especially when it comes to bookkeeping.

The above comparisons show that small and medium sized Enterprises in the Middle East, especially, face the same challenges mainly because they fall in the same region with almost the same economic, political, and social settings. The majority of Small and medium sized Enterprises falls under a sole proprietorship, which means that their owners, who may not have sound management skills to manage them. They also lack the financial resources that they can use to invest in risk management. Therefore, the status of Small and medium sized Enterprises in Saudi Arabia and other parts of the Middle East is almost the same?

4.2 Risk Management Techniques and Tools Used by SMEs

The researcher identified that scholars like Hollman and Mohammad-Zadeh (1984) presented a suggestion that after the analysis and identification of the risks facing an enterprise they can be handled in diverse ways. This study review of numerous literature materials identified that there are several tools and techniques that available to assist in risk handling in small and medium sized Enterprises.

4.2.1 Insurance

The research found that a qualitative study conducted in 2007 by Cioccio and Michael on 11 small and medium enterprises in Australia indicated that a large number of respondents who took part in the study, insurance was indicated as the primary tool for risk management. The researcher also managed to note that these two scholars described Small and medium sized Enterprises in the research as being aware of the fact that insurance covers the events that are unexpected. In other research, study reviewed in this study showed that |sparrow 1999 small and medium sized Enterprises obtain insurance cover against flooding, fire personal injury, and property damage. In addition, apart from offering protection in times of financial losses, insurance is likely to cover the Small and medium sized Enterprises services even if the covered enterprise does not incur the covered losses. Some of the examples mentioned included downside risk analysis, management services and compliance backing with constitutional requirements. These services are critical to Small and medium sized Enterprises owners because most of them are not experts in this area. Therefore, the researchers even when the risks insured on by a small and medium sized enterprise does, not materialize, insurance is always important because they are subjected to a systematical examination of risks.

4.2.2 Weather Derivatives.

In a study by leggio (2007), it was identified that extreme weather conditions prompted numerous small and medium sized enterprise to hedge their businesses’ exposure to disasters such as flood and drought with the assistance of weather derivatives. The mechanism is not expensive as compared to other tools and techniques in the process of dealing with risk. This kind of financial mechanisms helps small and medium sized enterprise to be able to transfer risks emanating from the weather to a third party. The researcher also managed to note that in the case of insurance a business owner contracts with other parties, and he or she is likely to try other options in case the weather conditions becomes unfavorable to the business. The reasoning, in this case, is that through the application of weather derivatives a small and medium sized enterprise financial pressure and the variability of sales can in some case be lowered by more than 80%.

4.2.3 Suppliers Selection

The research identified that Small and medium sized Enterprises enter into a contract with certain individuals as a way of influencing supplier behavior, which mitigates risks in turn (Ellegaard, 2008). The contracts involved are some performances that call for a constant check on the quality of products that are supplied to a small and medium sized enterprise and which may include penalties. This ensures that the materials delivered to the enterprises are of the required value and quality, thus, enable the enterprise to remain competitive in the market. Managers of many small and medium-sized enterprise are seen to focus more on procuring products within the local markets due to the fact it is usually advantageous western industries where aspects such as political unrest risk, currency and customer risks emanating from cultural differences are avoidable. In a qualitative study conducted by Raymond 2001, a small and medium-sized enterprise manager in countries like France and Canada confirmed that they worked with suppliers that were conversant with them and shared a similar mentality.

4.2.4 Production Overcapacity

A review was done by the researcher from Thun et al., (2011) study showed that production in excess, can preclude production interruptions which are increasingly often in small and medium enterprise’ s compared to large companies. However, the number of Small and medium sized Enterprises that are seen to have considerable reserves are not many and those that have the reserves comprises of small stocks and limited private financial resources. Additionally, this study was found that it analyzed only the manufacturing sector. These results are maybe specific to a certain line of business. This implies that additional research and data from other sectors can increase insights to which extent stocks can act as a risk handling technique for Small and medium sized Enterprises.

4.2.4 Networking and Cooperative Relations.

In a review of the available literature, the researcher identifies d that small and medium sized enterprise managers are the infrequent use of their personal networks to handle risky situations (Glimore et al., 2004).This implies that a close relationship with main suppliers may act as another technique of managing risk successfully. In addition, personal networks, in most cases, Small and medium sized Enterprises holds on close relationships that are similar to the clients in existence with a hope of gaining more repeat business. On the other hand, networks with competitors also help to prevent risky business transactions where sharing information with competitors leads to increased information on the credit worthiness of potential customers. It was also noted that small and medium sized enterprise managers tend to be in a cooperative relationship once they sense the high level of relation risk or in a case, they intend to gain a future completion advantage against their competitors.

Apart from the risks mentioned above, small and medium sized enterprise managers showed the need to entrust senior staff with responsibility (Glimore et al., 2004). This is following the fact that they were conversant with the issue of employees’ turnover, the risks involved and business cannot achieve its set goals without deleting its responsibilities. This form of risk emanates from the selection and management of employees where their responsibility is transferred. The research managed to note that small and medium sized enterprise managers are trying to understand their personal qualities, ambitions, and skills of employees through internal networking, which will assist them in the selection of candidates that are suitable and unlikely to leave the enterprise to avoid risky consequences to the business functionality.

4.2.5 Asset Securitization.

This method was also found to be a means used by Small and medium sized Enterprises in the risk management process (Jobst 2006).this method enables the insurer to transfer various types of risk, such as interest rates, liquidity, and credit risks to investors within the capital market at a reasonable price. In addition, it is difficult to form a small and medium sized enterprise to get access to capital due to their sizes. Thus, asset scrutinization acts as an option to the traditional channels of exterior financing.it also emerged that it can assist in the efficient scrutinization of markets in order to limit differences in the cost of credit and avialibility in the primary credit markets (Jobst 2006). However, the arguments presents are generated by conceptual consideration, analysis and testing their application to business is left for future analysis and study.

CHAPTER FIVE: DISCUSSIONS The aim of this paper was to offer a comparative review of risk management practices in Saudi Arabia and other countries. Additionally, through the employment of a literature based methodology, it was very clear that the issue of risk management in Small and medium sized Enterprises has become a challenge to so many Small and medium sized Enterprises around the world. As a result, different Small and medium sized Enterprises in different countries employ different strategies when it comes to managing of risks. It is also clear that the topic of risk management in emerging countries is a topic of interest in some research fields’ right from business administration, financial matters to new utilizations of scientific also, factual models combined with a PC programming outline. All the journals that were chosen offered a reviewed on the topic of risk management and risk management in Small and medium sized Enterprises. Bahaddad Houghton and Drew (2013:65), argue that risks are universally accepted as the possibility of occurrence of economic or financial losses of gains, and it is linked to the pursuance of certain actions or activities. Additionally, when it comes to threats, risks and adverse conditions. Azyabi and Fisher (2014:46) argues that risk is found in almost all human actions, all the enterprises, and management levels. Despite the fact that risk is inevitable, it can be predicted through experience and sound management (Rostam et al., 2014 45).in this case, an organization cannot be said to be managing its operations soundly if it cannot establish ways of dealing with all the prevalent risks. According to the findings of Bahaddad Houghton and drew 2013:65, risk management can be said to basically revolve around the identification of risks, measuring the changes and the possible effects of risks, and mitigation of risk through the use of minimum resources. Moreover, risk management as a topic of business management is found in some fields, including private and public organizations. Like larger organizations, Small and medium sized Enterprises also require effective risk management strategies to make due in the unverifiable and aggressive business environment. One thing that is holding the issue of risk management in SMEs mainly results from lack of adequate resources and expertise to deal with internal and external threats that endanger their survival in any business market. Azyabi and fisher, (2014:46) argues that, since any business cannot afford to be exposed to risks, and then it is important for the organization to understand and define what risks are. According to them, risk can be categorized into static and speculative risks. In this case, when it comes to static risks, static risks refer to those that cause damages without the possibility of any opportunity from their occurrence. Such risks are always negative, and they are unexpected because they are accidental. Speculative risks, on the other hand, can cause either opportunities or damages. Moreover, based on the research findings, these forms of risks can be said to be very typical entrepreneurial risks, as they are associated with planning and managing of business operations. In addition, risk can be brought about by inner or outside elements. The external factors that can cause risks include monetary, natural, social, political, and mechanical variables. The interior components, internal factors, on the other hand, include infrastructure, human, and process factors. In this case, therefore, a close analysis of the reviewed articles revealed that any business risks could be said to be occurring mainly because of external and internal factors of the business. In this case, it is, therefore, important for any Small and medium sized Enterprises to monitor their micro and macro environments in order to detect any potential risks. From the reviewed articles, it is clear that quite a number of them have shown that many Small and medium sized Enterprises lack explicit risk management strategies. Additionally, at the same time, they have no clear picture of the risks that they face in the business environment because they spend little time and resources to identify the potential threats. As a result, Azyabi and fisher (2014:46), indicates that about 30% of Small and medium sized Enterprises across the globe are not prepared to deal with the dangers that they confront. Small and medium sized Enterprises have poor risk management strategies due to lack of adequate resources, expertise, and technological systems. Fear of the additional cost of operations also makes small and medium sized Enterprises to avoid risk management practices. However, unlike large companies that have elaborate risk management strategies, a significant number of Small and medium sized Enterprises have not yet implemented the much-needed risk management strategies that can help them survive in the competitive market. A significant number of businesses in Saudi Arabia are found in the small and medium sized Enterprises sector. About 92% of all businesses in Saudi Arabia are Small and medium sized Enterprises and they employ about 80% of all workforce found in the country. This then calls for the argument by Al-Somali, Gholami, and Clegg, (2015:206) that small and medium sized Enterprises plays important role in the economic growth and development of various countries across the globe. They serve and satisfy the customized needs of various consumers and industries in all corners of the world. However, according to the findings of Bazhair and Sandhu, (2015:55), it is argued that the contribution of Small and medium sized Enterprises to the economy of Saudi Arabia is only 33% of the GDP, which is lower than many developing countries in the world, but higher that many GCC countries. Simultaneously, Al-Somali, Gholami and Clegg, 2015:206, complemented these findings by pointing out that the Small and medium sized Enterprises in Saudi Arabia can only operate for an average period of seven years. As a result, it is wise to believe that the capability and potential of small and medium sized Enterprises in Saudi Arabia. Therefore, the ability of the Small and medium sized Enterprises in the country to survive is very limited because most of them lack the much needed structural set up and financial resources that can ensure that they have very straightforward risk management strategies. Over the past ten years, the business world has witnessed an increasing vulnerability of social and industrial systems that revolve around natural risks, workers safety, clinical risks which have resulted in a global concern. As a result, a proliferation of empirical and theoretical developments of risk management has also been conducted in a number of fields with specific research methodologies, techniques and models emanating from some contexts. Additionally, in times of adverse conditions, firms need to carefully evaluate and monitor current costs and in the process, forecast potential expenses, which could be otherwise caused by risky actions. According to the reviewed articles, it was clear that risks and threats are inherent in Small and medium sized Enterprises irrespective of the kind of business activity. In order to ensure the survival of the business, it is accepted that knowing how to identify the adverse conditions, determine the extent of the risk, design risk mitigating techniques, and establish a technique of controlling and monitoring the risks is very crucial. Moreover, this was also found to be true most especially to Small and medium sized Enterprises who are believed to very vulnerable to risks because of their limited financial resources as well as limited structural features. The findings postulated in this research derive interesting attributes from scientific research works by highlighting a number of research gaps and guidelines for any. Small and medium sized Enterprises contexts in Saudi Arabia Small and medium sized Enterprises in Saudi Arabia are universally acknowledged to face a number of challenges. In this case, they lack some significant factors that are necessary for ensuring that the business develops effectively. Additionally, banking and other financial sectors avoid offering loans to Small and medium sized Enterprises to complement this aspect, Mukhtar, and Schiffauerova, 2016:453 postulated that Small and medium sized Enterprises are only allocated to approximately 2% of the Saudi bank's loan structure are. Moreover, source argues that business planning, innovations well as management issues makes up some of the issues that are affecting effective functioning of Small and medium sized Enterprises in Saudi Arabia. Furthermore, in the Middle East, the copycat behavior that is very prevalent among so many enterprises is believed to be one of the primary innovation killers in this region. This makes small and medium sized Enterprises in Saudi Arabia to engage in selling and purchasing of goods that are very simple in nature. The kind of goods and services that these enterprises involve themselves in are not of great nature due to financial complexities as the key risk that faces these firms.As a result, most of them realize very low sales margins, hence unlimited growth because of lack of unique marketing and promotion, managerial information and technological advancement. Based on the reviewed articles, it can, therefore, be noted that in Saudi Arabia’s Small and medium sized Enterprises do not basically employ the skill of knowledge management in their day to day operations. According to a study that was carried out by Bazhair and Sandhu, 2015:44 about 23 Saudi Small and medium sized Enterprises in the urban centers of Saudi, it was noted that most Saudi Small and medium sized Enterprises lack the much-needed funds to upgrade their company systems. One reason why this is the case was supported by 18 out of the 23 companies that indicated that the cost of training in the available training centers is very expensive most especially for a risk management and accounting course. Moreover, based on a study that was carried out Riyadh small and medium sized enterprise center of commerce and industry in the year 2011, the main barrier facing risk management in Saudi Small and medium sized Enterprises is bureaucracy through the business operations with the government. However, both the private and public sector is in the gulf region having acknowledged the fact that small and medium sized Enterprises require maximum support in terms of capital, business services, and training. It is for this reason that the Saudi government, the ministry of finance in conjunction with the Saudi banks has set up a program known as the “Kafalah” which they believe will be a new system that will ensure that the process of risk management in Small and medium sized Enterprises is more effective. According to Bazhair and Sandhu, 2015 this program offers financial help to Small and medium sized Enterprises since it supports Small and medium sized Enterprises in Saudi Arabia by approximately $53.3 million with loans that cover approximately seventy-five percent of all the financial assistance required. However, some articles and research papers that were reviewed were of the opinion that most support programs in UAE concentrate on financial support and in the process ignore other support programs like mentorship training for employees. As a result, this makes small and medium sized Enterprises to be highly vulnerable to risks and adverse conditions and in the process; it may cause most of them to disappear in the market’. In the case of specific risks to Small and medium sized Enterprises identified in the data collected, financial risk is seen to have the upper hand in the downfall of these enterprises in general. As a result, there is no doubt that each business entity requires a risk management system that is robust; however, for the SMEs much is needed. This is following the fact that these enterprises are not seen to have the wherewithal to control and manage risk because of their size and numerous limitations.as the study has identified this is not experienced by large firms where experts take care of the numerous issues pertaining risk. The researcher has managed to note that all the risks undertaking units should make sure that they operate in line with the procedures that are approved, controls and limits. The way Small and medium sized Enterprises operate fundamental diversities in the way they function and the manner they can be served within a financial market. This implies that the character of the owner is the major perilous credit indicator, thus, play a key role. The research showed that owner behavior is a key player when it comes to risk and risk management among the small and medium-sized enterprises. Hence, both the firm and experts’ relationship are rolled into one. Therefore, if it is the case of credit rating or in other words, risk rating is not likely to result in making a material difference to SME sector. There certain misconceptions that these enterprises may get low rating shows unreliable information and may not be able to access the fees to get rated. As stated in the findings section each business is subject to losses once they fail to manage their risks in an efficient manner. This implies that risk management can help in lowering the chances that a certain event is likely to take and in case it happens, management of risk should stand a better chance to reduce its impacts. Therefore, with sound risk management business wealth is protected and identification of possible threats is possible before they happen and then implementation procedures undertaken on time to navigate them. Through sound risk management, this research has identified that numerous benefits are to be enjoyed by SMEs. Some of the benefits include:

· Reduced insurance premiums

· Lower chances of the business that can be the target of legal action

· Lowered losses of stock and cash and,

· Reduced downtime of a business

CHAPTER SIX: CONCLUSIONS AND FURTHER RESEARCH

6.1 Conclusion

The aim of his research was to explore the risk management applications in SMEs in Saudi Arabia and compare them to other countries in the world. Therefore, its primary objective was to come up with a framework that will assist SMEs in Saudi Arabia to mitigate risks when they venture new products in the markets in which they operate. As a result, the research findings are based on secondary data where systematic review of the existing literature on this topic has been done.

The researcher has discussed the situation of SMEs in Saudi Arabia as far as risk management is concerned and compared this to other parts of the world. In the numerous research risks that face small and medium sized Enterprises have been discussed. In addition, the research has also explored numerous tools and techniques that are being used, and that can be applied by Small and medium sized Enterprises in Saudi Arabia to assist in its risk management operations.in the findings section, the research has identified that SMEs have not been left behind in matters of risk management. However, factors such as limited resources and more so financial constraint is a big issue among these enterprises. Therefore, for some of the identified risk management measures to work enough resources and especially managers behavior seems to be a key player.

In addition, this research confirms that risk management as far as enterprises is concerned is universally acknowledged as a process of seeing to it that that risks and opportunities are managed in a more effective manner through organizing as well as planning activities in an institution. Risk management is a way of prioritizing, assessing and identifying opportunities, risks to increase or reduce the influences that may be incurred in the overall goals, capital or earnings of any organization. In simple terms, this can be a government organization or an institution. As seen from the study, the first initial step in the process of risk management is the identification of the risk in which an organization is in a position to identify and distinguish a number of specific conditions which are basically critical in an institution has planned activity implementation plan. The research also goes ahead and identifies that it is vital that an organization assesses the risks through evaluation and monitoring of the impact of the risks to the organization. In simple terms, the process should revolve around the risks that results in accidental losses to Small and medium sized Enterprises, an institution, financial, strategic and operational, and other associated risks.

In the modern world, it is accepted that there are a number of players that can ensure that the risk management program is implemented successfully. However, it should be known that in the case of Small and medium sized Enterprises, the governments of the host nations possess a critical role in ensuring the success of risk management. In this case, the governments are charged with the responsibility of establishing policies that will help in mitigating and managing risks that various Small, medium sized Enterprises, and business people face in the process of investing in a number of business sectors. One sure thing is that contrary to extensive business enterprises, Small and medium sized Enterprises lack the necessary risk management strategies because of limited resources, inadequate information, and poor managerial knowledge and skills. In essence, this has made so many SMEs to lack the much-needed risk management programs. As a result, there has been an increased level of speculations around the world. Therefore, the research concludes that a great concern revolves around how governments can assist in dealing with the issue of risk management.

6.2 Recommendations

According to this research, Small and medium sized Enterprises are seen to be part of the growth engine of the economy and a good source of employment making them one of the key focus areas among the policy makers in Saudi Arabia. In the case of risk, all the business demographic factors must address especially the government policies that can either influence the decisions made managers positively or negatively. Despite the contributions of this research towards risk and risk management among the small and medium-sized enterprises, there were numerous limitations as discussed. However, based on the findings on sources, risk, tools and techniques involving SMEs the following recommendations will work positively towards risk and risk management approach among these enterprises.

The manager's behavior with respect to risk and risk management in small and medium-sized enterprises has been discussed. Thus, these managers must be able to recognize there is a recommendation of a holistic approach towards the management of business risk to make sure that it is managed in an effective way. The effectiveness of the process can be enhanced by management procedures adopted to support and commitment of the business top management, culture of communication within the enterprise and information technology advancements.

Insurance has been identified as a tool and technique that Small and medium sized Enterprises use in Saudi Arabia to deal with the issues related to risk. Therefore, the insurance companies in the country must come up with provisions for these enterprises in all the sectors in the context of policies and ensure that the packages are attractive to these businesses as a way of persuading the managers to patronize the packages. In addition, the awareness of such policies should be passed to this enterprises.as a result, SME will make use of this tool and technique fully to mitigate their risk and protect their growth and development in general.

The other very important recommendation is among the banks. This research has identified that one of the risks faced by SMEs in Saudi Arabia is under financial risks and constraint. Therefore, banks, financial institutions and other credit unions must be able to add business advisory services to what they are already offering, capacity building and training for the small and medium size enterprises with more emphasize on risk management approaches.

6.3 Future Research

There is a need for additional empirical research, particularly in the implementation and control of risk management processes in Small and medium sized Enterprises. This will help in shedding more light on the difficulties experienced by small and medium sized enterprise experience in this context to identify useful practical strategies for these steps. On the other hand, the risk identification steps and analysis also offers a good opportunity for increased research, which is not beneficial to academia, but for the small and medium sized enterprise practice. For example, from the existing literature, the frequency is not clear in the manner risk identification is undertaken and the exact way risk analysis is done effectively in Small and medium sized Enterprises. Additionally, it not clear on the one who contributes to the risk identification as well as analysis of a small and medium enterprise. Another very important research area is the effects that SME’s owners and managers behavior has towards the process of risk management. That is does the behavior factors of these characters interfere positively or negatively to the risk management process or not.

In a very limited work environment where each business operation is involved wholly and impacts other operations, based on the reviewed articles, it is accepted that management of one business operation should be closely interlinked with the rest of the other business operational issues. In other words, risk management in Small and medium sized Enterprises most especially those found in emerging countries like Saudi Arabia should not be an alone program, but rather it should be integrated with other processes of management like planning, human resources, customer relationship management and financial management. Because of the limited scale of micro companies and SMEs, the owner of the business will be responsible for making decisions regarding risk management. In this case, the nature of strategies required to deal with risk management depends entirely on the complexity of the business operations are and the size of the business.

The findings of this research indicate clearly that risk management strategies for businesses in emerging countries relate to how that country is able to systematically respond to adverse conditions. This is one reason why the government has a big role to play when it comes to risk management in Small and medium sized Enterprises. Additionally, the business owners together with the support of the host nation’s government to be confident enough based on the fact that they have been very fruitful in leading the organization which makes risk management plans to be down on the list of priorities most especially for small and medium sized enterprise owners. In this research, the findings revealed that small and medium sized Enterprises in most countries only prefer insurance and external-internal audits as techniques of mitigating risks.

From the analysis, it was clear that there are several techniques used in different countries and which can chose to mitigate risks or rather process risk management to reduce loss exposures. In this research, the steps that were identified revolve around risk identification, analysis of risks, risk implementation and risk control. It is for this reason that management skills and size are classified as being disadvantageous or advantageous for SMEs. Besides, on the negative perspective, the limitations reduce the ability of Small and medium sized Enterprises when they are exposed to risks. In summary, the topic of risk management can be classified as an unavoidable issue in Small and medium sized Enterprises especially because of the boomingly internationalized markets and because of the diverse business operations. In simple terms, risk management is not a very new terminology, but it is increasingly becoming a new challenge to Small and medium sized Enterprises in developing countries. Therefore, because of the importance of SMEs to the economy of the developing countries, risk management requires the much-needed attention of the government and small and medium sized enterprise owners and strategies needs to be implemented to deal with this challenge.

In the reviewed articles, it was also clear that only conceptual research was found, thus, an additional future research most especially on the stages of risk management (risk control and risk implementation). These steps need to be carried out in order to offer a more comprehensive insight into the challenges that small and medium sized Enterprises in Saudi Arabia and other countries experience. This move also involves the establishment of important strategies for these stages. Moreover, risk analysis and risk identification in Small and medium sized Enterprises according to the reviewed articles also offers an opportunity for empirical research which can be said to be not only important for academia but also for small and medium sized enterprise risk management practices. For instance, from the reviewed articles, it is not clear how frequently risk identification process should be conducted and how exactly the process of analyzing risks is conducted in SMEs more effectively. Besides, the articles do not specify the person who is responsible for this processes whether it is only the top management or workers or whether they source advice about risk management.

From the results and findings of this research, another potential area of research revolves around the impact of the attributes of the owners of Small and medium sized Enterprises. Ass indicated earlier; the owner's attributes plays a crucial role in managing risks in small and medium enterprise. In this case, it is not very clear from the findings of the reviewed literature how their career paths affect the issue of risk management in Small and medium sized Enterprises. Additionally, future research works could try to examine whether the owners initially held a top management position in another company before setting up their own and how that affects the issue of risk management in SMEs.

In a research perspective, it can be argued that this research review has presented the research world with some evidence, which indicates that the challenge posed by risk management to Small and medium sized Enterprises may change as the size of the firm changes. In other words, these findings indicate that risk management strategies should evolve with time, but should remain contingent to particular developments. Therefore, another potential research avenue in future, as far as, risk management is concerned should revolve around the life cycle stages of Small and medium sized Enterprises risk management practices. Besides, it is important that the discussions and findings of this research stimulate further research works as far risk management practices are concerned in Saudi Arabia and other emerging countries. If other research works will follow suit, only then will the issue of risk management practices in emerging countries and Saudi Arabia will be explored comprehensively by academia which in the process, might play a very crucial role in increasing the survival opportunities of SMEs and consequently impact the world economies positively.

6.4 Limitations

This research paper has limitations like any other which need to be acknowledged. The finds of a literature review or research based on secondary data are contingent in terms of selection and criteria for inclusion. The keywords search actually depended on the management of risk as well as on a small set of connected keywords. In this case, risks and risk-related aspects such as moral hazards and adverse selection were excluded in the word search. The limitation here is that inclusion of keywords in these issues may have resulted into a broadened literature set on risks in Small and medium sized Enterprises, however, on the expense that many data materials for review found could have dealt with the real management. Therefore, this implies that other keywords search may have led to other diverse review results irrelevant to this research objective. Another case is the issue of defining the threshold of papers that were to be included in the review. This implies that lack of such a threshold excess number of materials would have been included in the data collection process where it is found that some of the results within these materials could not have undergone a certain strict quality check making them less reliable. Additionally, a selection of these data materials majored more on a certain type of materials such peer-reviewed journals and specific books which led to the exclusion of other materials with reliable information connected with the research topic.

6.5 Research Demerits

The established research results revolved around the selection and inclusion criteria that were established in previous research works. This move may in one way or the other constrained the work of the research around some already developed concepts. The other thing is that the research did not deal with the actual involved parties in case it would have been in case the research data collection instruments would have been questionnaires. In this case, this research deliberately concentrated on the keyword search criteria joined with a limited number of related words. In so doing, this research works excluded aspects such as the issues related to risks and types of risks. In other words, the reason why keyword search in this research is a limitation is that if keywords about the mentioned areas were included, then this research could have offered a more comprehensive review on risk management. In simple terms, additional keywords could have enhanced the research results. Moreover, the same issue also applies to the criteria used to identify the threshold of the articles to be included in this research. One sure thing is that, without the threshold, the results of this research would have taken another direction since; much irrelevant information may be included in this research. However, since this literature review focused mostly on journals, magazines, and books, it can be said that gray literature may possess interesting findings that may be important for this research

6.6 Research Major Observations

· Small and medium sized Enterprises are universally accepted as those firms that do not exceed threshold values for a particular number of workers, total assets or total annual assets. In other words, based on the definition by Bajo et al. (2012) Small and medium sized Enterprises are basically those companies that are able to accommodate less than 20mworkers and possess total assets of less than 42 million euros/annual turnover of fewer than fifty million euros

· The articles that were reviewed in this research paper were found to lack a comprehensive coverage of risk management as far as SMEs in Saudi Arabia, as well as emerging countries, are concerned.

· In this research, as much as the keywords that were used did not include risk types for some reasons, a number of reviewed articles had some information revolving around the types of risks in Small and medium sized Enterprises, which did this research to include a subsection of the identified risk types.

· Nevertheless, another notable aspect of this research was that there was some information about emerging countries like Saudi Arabia, which was not written in English but rather in their respective official languages. In this case, as much as these articles may pose very important research findings of SMEs risk management, it is acknowledged that quite a number of researchers and owners of SMEs may only use these resources if they possess a translator or if it is written in English.

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