Risk culture adopted by financial SMEs in Malta

Abstract

The main purpose of this dissertation is to establish what risk culture financial small and medium-sized enterprises in Malta adopt. This is mainly useful in determining whether such enterprises are effectively supporting and undermining their long-term success.

To achieve this, the researcher first delved into secondary research to explore the nature and importance of risk culture as well as to familiarize the reader with other articles and literature on their approach on risk culture. In addition, the attributes of good risk culture were also explored. Different types of frameworks were highlighted to identify several features and procedures evident in diverse risk culture frameworks. The aim of this is to compare and contrast the secondary research with the primary findings to ultimately arrive to the main objective of this study being, whether local SMEs are making use of adequate practices and procedures to complement their long-term success.

The practices and procedures of local SMEs were discovered through interviews conducted to seven individuals working in the risk field which constituted of Chief Risk Officers, Risk Managers and Managing Directors. After gathering this data, an in-depth analysis was done by using the thematic analysis process to appropriately address the different research questions of the study. Interpretations explored by the interviews were then compared and contrasted with the secondary research conducted prior. Illustrative examples relating to what manner companies counteract any challenges that they might face in their risk culture were also portrayed. Through the thematic analysis process, similarities in the way SMEs approach their risk culture were identified and grouped into the following themes: Fragmented yet Integrated Frameworks, Business Dynamism, Contextual Developments, Controllability Limits, Adaptability, A Behavioural Approach and Risk Culture Assessment. The research exhibited similar practices whilst also portraying different procedures SMEs make use of within their risk culture to ultimately reach their long-term goals. Most of the responses were comparable to the secondary literature. However, several contradictions were still evident despite the similarities. In short, a more systematic understanding of the risk culture procedures and practices by local SMEs were made clearer for readers to better understand the underlying foundations of diverse risk cultures.