Risk management systems are a crucial lever in accompanying the international development of companies, making them more reliable in the eyes of the credit and insurance systems. However, the management of internal and external risks is an aspect on which the Italian economic system still has to work on.
Amcham (American Chamber of Commerce in Italy) has developed a white paper on Risk Management in small and medium-sized enterprises, created by a working group composed of associations, enterprises and insurance companies. The objective was to investigate how these companies, through Risk Management, increase their competitiveness and improve their business skills, as well as to see how they face global markets with greater security and possibility of success.
Often companies undertake investment projects abroad focusing their attention on the opportunities of the reference markets, meanwhile underestimating the need to structure the company management processes, including Risk Management, in a solid and effective way. This attitude has been profoundly altered by the ongoing health emergency, which brought to light the lack of resilience of some companies and the need to build more efficient and timely risk control systems that can protect from exogenous and unpredictable events.
According to a survey conducted by Anra (National Association of Risk Managers) as a contribution to the paper, risk management in small and medium-sized Italian companies is spreading and becoming more developed: 42% of the companies analyzed have been using risk management systems for more than 5 years, and only 21% have not implemented any measures. Moreover, for 58% of the companies, Risk Management is a central element in their strategies. However, only 20% have specific insurance coverage regarding risks related to internationalization.
The increasing market globalization has made it necessary for all companies to confront phenomena such as production delocalization, growth of exports, and the search for new markets, with the aim of increasing profit margins and competitiveness. For many Italian SMEs, the decision to internationalize their business was initially motivated by the domestic market declination. However, as pointed out in the Amcham paper, considering exports as an episodic activity - without having a solid strategy and adequate resources - and tackling foreign markets without a risk management plan is a mistake that can undermine the success of the choice. "Undertaking an internationalization activity allows you to seize important development opportunities, which are partly realized in the short and medium term, such as increases in sales volumes, but are often less immediate and evident - explains Enrico Guarnerio, CEO Strategica Group - an SME that undertakes activities abroad must have a medium to long term vision and must be aware of the risks possible ".
There are several risks to which an SME may be exposed while pursuing its internationalization strategy. Among those with the greatest potential impact are the risks of incompliance arising from diverse regulations in force across various countries. Other high potential risks are the arbitrary enforcement of guarantees risk, the risk of suspension or product recall, the risk of goods collection failures, exchange rate risk, as well as financial and interest rate risks.
These are the risks that require a careful analysis and a tailor-made mitigation plan, which can only be achieved with the support of qualified companies that can rely on a multinational dimension. "It is essentially important to identify an insurance partner capable of managing international insurance programs in a homogeneous, coordinated and regulatory compliant way worldwide - explains Piero Palmisano, Director of Strategica Insurance Management - thanks to the experience of our group, the deep knowledge and professionalism gained and the collaboration with the Assurex Global network, Strategica is able to ensure an excellent service".
According to Amcham, in order to achieve a system in which all the stakeholders are contributing to the success of the companies, it is also necessary to have an institution participation. In this direction, the paper proposes three suggestions as a conclusion. The first one is the creation of a Temporary Risk Manager: a figure that, similarly to the Temporary Export Manager, can be hired by SMEs taking advantage of tax incentives, with the aim of evaluating the risk management systems of the company and realizing a state-of-the-art system. Secondly, Amcham recommends that the presence and quality of a Risk Control System should become an element of evaluation of the company's internationalization plans in projects in which financial and public institutions are involved. A tool of this kind, indicating the company's resilience to risks, would also help improving the quality of credit, both in terms of guarantees and in terms of cost/opportunity. Lastly, the Italian business association system should develop a national education and training plan regarding risk management issues, highlighting opportunities arising from the adoption of correct risk management practices, in terms of organization, competitiveness and sustainability. These are all major factors that will contribute to defining the Italian system competitiveness.
