DYNAMICS OF ECONOMIC AND FINANCIAL RISKS IN SME’S

Abstract

The role that small and medium enterprises play in both developing and developed countries cannot be ignored and, therefore, their existence and survival it is a matter of major interest for both policy makers and researchers. Although there are several factors that can have a negative effect on the profitability, security and stability of the business, small and medium enterprises are increasingly exposed to new types of risks due to the recent global events. One of the main goals of every entrepreneur-owner is to identify these risks and prevent them before they become a major problem. The survival rate of an SME depends in most cases on the efficiency of the management process. Therefore, it is necessary to design a general picture that gives the management (entrepreneur - employer) a synthetic picture of the vulnerabilities of the company. The objective of the research is to obtain a practical working tool for SMEs, under the name of barometer for identifying and measuring economic and financial risks – thus improving the management process. The research is a methodological one, of predictive and stimulating type, oriented towards explanation and practical applicability. The idea started from the urgent need for management to identify at a reasonable time the areas of economic and financial risk, from which the disruptive factors of economic activities start – considering the fact that, unlike corporations, SMEs do not posses their own arsenal in terms of resources (financial, human, logistical, etc.) which leads to their increased vulnerability. The goal of this practical tool is to increase the survival rate of SMEs and therefore its profit.