An enterprise risk management system for SMEs: innovative design paradigm and risk representation model

ABSTRACT In this conceptual paper, a system design paradigm, intended to help small and medium-size enterprises (SMEs) engage in enterprise risk management (ERM) with a minimum investment in resources, is proposed. The foundations are both compliance with ERM general guidelines and two main principles, namely adaptability to different SMEs profiles and simplicity of use. The solution emerges as a combination of a simplified framework and a customizable methodology. Then, a full-ERM system is proposed whose enactment is supported by a specially developed risk representation model based on causal dependencies between events, taking into account risk interconnectivity and strategic context alignment. The sequential ERM framework, designed with mandatory and optional modules, is presented together with its associated risk representation methodology part. The latter is intended to be straightforward and adjustable to various contexts.