Role of Risk Management in Improving the Operational Effectiveness of SMEs: A Systematic Review

Abstract

The article provides a systematic review of research on risk management in improving SME operational effectiveness. Using the Systematic Literature Review (SLR) method, following Tranfield et al. (2003), the study reviews peer-reviewed articles published between 2006 and 2024, focusing on the application and impact of risk management practices in SMEs. A total of 29 articles were selected and critically analyzed to extract key themes, findings, and research gaps. The findings highlight that effective risk management significantly enhances SME operations by allowing businesses to identify, assess, and mitigate potential risks. Structured risk management frameworks enable SMEs to increase resilience and better handle uncertainties. Advanced technologies like AI also improve supply chain agility and operational efficiency. Furthermore, integrating risk management with innovation processes fosters creativity and strengthens competitiveness. However, challenges such as limited resources and lack of awareness hinder broader adoption of risk management practices in SMEs. The article contributes to the literature by identifying best practices and strategies for improving risk management in SMEs, emphasizing its role in supporting innovation, internal capabilities, and sustainable growth. It offers valuable insights for both practitioners and researchers on enhancing resilience and operational effectiveness through risk management