Perceptions of risk and risk management in small firms

The purpose of this paper is to report and analyse the findings of a survey that examines both perceptions of risk and the importance of risk management strategies of a representative sample of small firms in Australia. The survey was undertaken by telephone with 600 decision makers within small firms interviewed, together with a group of 105 CPA's who regularly interact with small businesses. Both internal and external risk factors were assessed. The results allow for an increased understanding of risk management practices of small firms and enables a comparison with the views of their practices by practicing accountants (who are the main financial and business advisers to the sector). The results highlight the differences in views, perceptions and priorities of small business owners compared with professional managers (CPAs). The differences reported indicate a fundamental divergence of views between the two groups that has interesting implications as to the effectiveness and impact of the small business/professional accountant relationship.