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CM Januar / Februar 2008
Sophjstication of
Risk Management Practices
in German SMEs
von Thomas Henschel, Leipzig
Concerning risk management practices in Ger-
many, ttiere tiave been conducted many studies
that deal with very large enterprises. Small to
Medium-sized Enterprises (SMEs), however,
tiave been neglected in risk management con-
siderations. This empirical investigation aims at
filling ttiis gap. The findings reported here are
part of a larger research project dealing with an
assessment of the risk management sophisti-
cation of SMEs.
substantial findings. The national and internati–
onal literature also offers only a few proposals
how a risk management suitable for SMEs
could be designed. This tact is offen explained
by risk management Oeing a very young branch
of business management theory which has yet
not developed
Standards
(see, for example, Al-
quier and Tignol, 2006, p. 277; Consultation
and Research Centre of the Institute of Charte-
red Accountants, 2005).
Importance of Risk Management
in Germany
InGermany, the theme of risk management (not
only for SMEs) has moved back into the centre
of focus
Over
the years from 1998 until now
(2007). The cause was the German Control and
Transparency Act (KonTraG, 1998) which came
into effect on the 1May 1998. The background
to the act was a number of spectacular compa-
04
12
24
S
G
F
In 2004, there were a total of 2,915,482 com-
panies inGermany, 99.7% of themOeing SMEs
(according to caiculations made by the IfM Ins–
titut
für Mittelstandsforschung - Institute
for
SME Research).
These SMEs employed 20
.1
mlltion people or around 70.5% of all em-
ployees
in the Föderal Republic (Günterberg
and Kayser, 2004). The percentage indicates
very clearly the significance which SMEs have
for Germany.
But
apart from constituting the overwhelming
majority of all enterprises, German SMEs have
a high value in other national economic func-
tions. For example, during periods of high un-
employment the employment function of SMEs
becomes one of the main supporting columns
of the national economy.
Over 80% of the dual
training of qualified workers is carried out
by SMEs
as well (Kayser, 2006).
It is therefore all the more surprising that in
Germany SMEs have so far been largely igno-
red in empirical business management re–
search (see Ossadnik et al., 2004; Dahms and
Siemes, 2005). Concerning the current
State
of
risk management in Germany, there are no
Dipl.-Kfm. MBA (UK) Thomas Henschel
Vertretung der Professur für BWL, insbesondere Rech–
nungswesen und Controlling an der Hochschule für Tech–
nik, Wirtschaft und Kultur Leipzig (FH), Fachbereich Wirt–
schaftswissenschaften, Gustaf-Freytag-Str. 42, 04277
Leipzig. Tel.: 0341 - 3076-6538
According to the IfM and the present
author
's
own caiculations based on the 2002 Value
Added Tax (VAT) statistics (Föderal Statistical
Office, 2004), 71.9% of the German SMEs
are to be found in the following industry sec-
tors:
« construction
m
engineering
•» Information technology
•• auditing. Consulting and training
- trade,
Service
and logistics
The present paper will deal with just these five
main Industries,
ny crises which have occurred Over the last few
years and which, in the opinion of the lawma-
kers, were caused by a lack of risk awareness
and insufficient control and intormation mecha-
nisms.
In contrast to the explicit regulation for Joint
stock companies, no corresponding regulation
has been provided for the other enterprises.
Based on the reasoning behind the KonTraG
law, the prevailing opinion assumes that the law
also has a spill-over effect on the duties and
Obligations of a "prudent businessman" of any
Company According to the governmental subs-
tantiation of the KonTraG law, each Company
has to establish a risk management being in
accordance with its size, structure and comple-
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