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CM Januar / Februar 2008
Within Clusters 2 and 3 clearly more persons
are responsible for implementing and running
the risk management. It is particularly remar-
kable that for these tasks the
Controlling
func–
tion is involved. This fad is related to the firm
size since medium-sized and large firms are
more likely to have such a functional unit. It is
also Worth noting that more persons are re–
sponsible for assessing risks than within düs–
ter #1. Again the Controlling function has a
strenger influence, and designated employees
from the business units are involved to a larger
extent.
Factor 2:
"Risk management process, part
1"
Concerning the frequency of risk assessment,
the link of risk management to business plan–
ning and the use of risk management Software,
it is interesting that düster #1 (which Covers
rather the smaller firms) has for all variables the
best scoring means. A possible explanation
could be that, because of their clear strudure
and the business processes of minor complexi-
ty, these firms have implemented their risk ma–
nagement more easily. Containing firms with
more complex
System
strudures, Cluster #2
comes next. Cluster #3 achieves the worst
scores with regard to the Integration of risks
into the business planning.
In all, there are clear deficits with resped to the
Integration d identified risks into the business
planning. Compared with the theoretical maxi–
mum, the scores are very bad. This implies that
the firms are not able to estimate the effeds d
risks on the importance of the company's target
figures profit and liquidity. Since this fad may
lead to a considerable endangering of the survi-
val the findingmust be viewed as very dramatic.
Factor 3:
"Risk communication"
This factor also reveals a clear size effed. With
resped to the board of directors being informed
about risk and the formal risk documentation,
Cluster #2 does best. This düster mainly con-
tains larger firms where being part of a group is
more likely to be found. The guidelines of the
group and the Problems of liability make neces-
sary a more comprehensive documentation and
Information. A separate risk reporting is used
only seldom. As a rule, the board ot directors is
informed about risks in the frame of the general
reporting. Risk management documentation
strongly falls back on quality management; for
example, the quality manual may provide a se–
parate part for the risk management System.
The remaining Clusters have comparatively
small average scores. IVIost clearly this can be
Seen concerning the formality of risk documen–
tation, where Clusters #1 and #3 have signifi-
cant weaknesses. A formal documentation rare-
ly takes place, and if it does it takes places as
part d the meetings of the board of directors.
Factor
4:
"Risk management process. part
2"
Concerning the number of risk categories being
assessed, Clusters #2 and #3 lead, while the
firms of Cluster #1 (which mainly contains micro
and small ones) on the average assess the
smallest number of risk categories. In all, an
average number of 3 risk categories has been
deteded.
Within all Clusters, the time horizon of risk as–
sessment is rather short-term, on the average
about 1 year. Somehow astonishing is the fad
that Cluster 1 (covering rather smaller firms)
has the largest mean score, while duster 2
(rather larger firms) has the smallest mean
score. A possible explanation could be that the
larger firms of Cluster 2 work in a more stähle
business environment and, because of their
strenger market Position, do not attach so
much importance to a large time horizon of risk
assessment.
Regarding risk management expenditure, all
three Clusters reveal a uniform picture. The
questioned SI^Es do not plan large expenditure
for establishing a riskmanagement.
Using for a characterization the attributes low,
moderate or high, there are no differences
between the Clusters concerning "risk manage–
ment responsibilities" (factor 1), "risk manage–
ment Software" (0 2.8 of factor #2) and "risk
management expenditure"; all of themhave low
mean scores. Moreover. all Clusters have mo–
derate mean scores for "risk categories" (Q 2.3
of factor 4).
Distindive features of the Clusters are:
Cluster 1
The variables "risk assessment: frequency"
and "link of risk management to business plan–
ning" (Q 2.5a and Q 2.7 of factor 2) have bdh
high scores, exceeding the other Clusters. Es-
sentially, "risk communication" and "risk ma–
nagement process. part 2' (factors 3 and 4)
have moderate scores.
Cluster
2
This
Cluster
with the smallest size (which con–
tains relatively large firms) reveals some peculi-
arities. Of all Clusters it has the best mean
scores for "risk communication" (factor 3) and,
essentially. the worst ones for "risk manage–
ment process. part 2" (factor 4). Concerning
"risk management process, part 1" (factor 2), it
has rather moderate scores.
Cluster 3
Both means being low, düster 3 shows the
worst scores for "risk communication" (fac–
tor 3). "Risk management process, parts 1 and
2" (factors 2 and 4) have rather moderate
scores. On the other band, within all low outco-
mes, this düster has the best mean scores for
"risk responsibilities" (factor 1).
In all, Cluster 1 contains firms with the best de-
veloped risk management Systems. Cluster 3
follows with some gap. The firms of düster 2
reveal a risk management of rather average so–
phistication, with the exception of factor 3 ("risk
communication") where their mean scores
clearly exceed those of the other Clusters.
Conclusion
As the literature points out SMEs reveal de–
ficits with respect to their management
methods and Systems. The questionnaire
results demonstrate that SMEs have consider–
able deficits regarding formal methods of risk
management.
The Cluster analysis has shown that German
SMEs appear with very different levels of risk
management sophistication. The factor grou-
pings induced by the factor analysis of the risk
management variables show an interesting
strudure. Regarding the responsibility for Im–
plementation and reviewing the risk manage–
ment, the firms have in all three Clusters low
scores.
A
similar picture can be stated for
the risk communication and documentati- 89