Title: Risk management practices in German SMEs: an empirical investigation

Authors: Thomas Henschel

Addresses: Hochschule Merseburg University of Applied Sciences, Fachbereich Wirtschaftswissenschaften, Geusaer Strasse 88, Merseburg D-06217, Germany

Abstract: This paper reports the current risk management practices in German Small to Medium-sized Enterprises (SMEs) (so-called German |Mittelstand|). In particular, it studies possible relationships between risk management and business planning activities. Additionally, it determines to what extent the Balanced Scorecard (BSC) is used, for the general purpose of performance measurement and especially for the purpose of risk management. The enquiry was carried out by means of a postal questionnaire. The results show that in German SMEs the handling of risks is strongly concentrated on owner–managers. Risk management is carried out in a rather rudimentary way. Only a few SMEs have established a comprehensive business planning system, and the link between their risk management and their business planning in most SMEs is not well developed. But a sound risk management requires an elaborate business planning, together with a direct mapping of risk figures into the planning system. In general, the BSC was met open-minded, but its use for risk management is mentioned by only a few enterprises. This investigation is a first step of a larger empirical approach to risk management practices in German SMEs.

Keywords: risk management; small to medium-sized enterprises; SMEs; long-term business planning; balanced scorecard; Germany; questionnaire; performance measurement.

DOI: 10.1504/IJESB.2006.010543

International Journal of Entrepreneurship and Small Business, 2006 Vol.3 No.5, pp.554 - 571

Published online: 30 Jul 2006 *

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