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Sophistication of Risk Management
on.
The risk management process is more dif-
ferentiated. Risk assessment has already made
some progress.
The most significant
problem
in all SME size
classes is
still the lacking Integration of the
identified risks into to the business plan–
ning.
Without such an Integration the firms
are
unable to determine the company's entire risk
Position. In micro and small firms themanaging
director has the opinion that he can get an
overview on risks entirely in bis mind.
The Company size is an essential factor to dis-
tinguish the quality of risk management Sys–
tems. The industrial sector has only limited
power to distinguish. One can merely State that
sectors with a more elaborate technology -
such as engineering, Information technology or
auditing/consulting/training - have already
made strenger efforts on risk management. In
contrast to that, the sectors construction and
trade/service/logistics are rather lagging.
For a risk management process being able to
work it is also
essential that there is a holis-
tic Integration into the existing business
planning
Systems.
Without this Integration
risk management
would
only remain mere
"empty talk" and of no use for the firm.
The employees would not see its benefit, they
would only think of it as an additional workload.
If, in contrast to that, risk management were in-
tegrated into the classical planning process, the
acceptance would increase, leading to a more
systematic and comprehensive risk assess–
ment. Only in this way risk management in
SMEs can be established which ensures practi-
cability and low costs.
Controlling plays an essential role for orga-
nizing risk management in SMEs and for
improving it.
The managing director alone will
not be able to establish and to maintain
risk
management. The results of the questionnaire
have presented that firms having a
Controlling
unit assign it to implement risk management.
In
firms
having a Controlling function the risk ma–
nagement process and the methods of risk as–
sessment are significantly better established.
There is a size effect with respect to having a
90
Controlling
unit: Controlling plays a role only for
medium-sized and for larger firms. In micro and
small firms Controlling tasks are carried out by
the managing director or by a member of ac-
countancy staff.
The empirical investigation of this study leads
to the conclusion that, considering the Imple–
mentation of risk management in SMEs, certi-
fied chartered accountants play an essential
role. Chartered accountants can help to over-
come the deficits of risk management that
SMEs reveal. In particular, small and medium-
sized firms expect from this professional body
not only the audlting of the annual financial
Statements, but also a consultation on riskma–
nagement issues. Because of the heterogenei-
ty of SMEs, this is a challenge since chartered
accountants cannot simply offer to SMEs the
same concepts as for large firms. They must
adopt these risk management methods to
the special needs of SMEs.
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