Handling the Crisis: The Rise of Risk Management?

Abstract

Introduction: The crisis in 2008/2009 was severe and had a big impact on many companies around the world. Management control was one factor that was affected and this reports aims to look into how it changed. Throughout our research we kept coming into contact with risk management as something that has become more important in research in later years. We wanted to know how risk management is related to the crisis and its effects on management control, which we found to be an interesting and unexplored field of study. Therefore this report will be oriented towards risk management. Purpose: The purpose of this report is to study how the financial crisis of 2008/2009 affected large Swedish companies and particularly their management control. We want to look into how management control has developed in the wake of the crisis and particularly focus on the perceived increase of focus on risk management and how Swedish companies approach risk. Method: In order to fulfil our purpose we had to choose a few companies to study. We chose Cybercom Group, Getinge Group and Vitrolife Group, which are large, publically noted, international companies that have offices in Gothenburg. In order to study our selected companies we interviewed representatives from our three companies and studied their published annual reports from 2008, when the crisis hit, up until today. This would allow us to make comparisons between the companies’ financial situations, management control and their risk management. We also compared our findings to previous research done in the fields of management control and risk management. Empirical Evidence: We found that the three different companies had been affected differently and to varying degrees by the crisis. We were also given some insight in their differences in management control and their approaches to risk, allowing us to make comparisons. Analysis and Conclusion: By comparing our gathered information with the existing research, we reached three main conclusions about our studied companies. Firstly we could see that the increased focus on risk management in literature can be seen in practice as well, although risk management is not yet fully implemented in our companies. Secondly we found that the process of implementing risk management in a company can be seen as a ladder. The step of the ladder a company is currently standing on can be used to classify how far a company has come in its implementation of risk management. The final conclusion we drew was that management control and risk management appear to be closely linked in practice; that risk management can be seen as a part of the management control package. Possible further research: Larger studies concerning risk management with more companies in order to be able to draw more general conclusions and to see if our theories can be confirmed.