Organization and Incentivization of Risk Management
von Marta Elzbieta Michaelis geb. Wilczek
Datum der mündl. Prüfung:2022-03-07
Erschienen:2022-03-22
Betreuer:Prof. Dr. Stefan Dierkes
Gutachter:Prof. Dr. Stefan Dierkes
Gutachter:Prof. Dr. Claudia Keser
Gutachter:Prof. Dr. Waldemar Toporowski
Dateien
Name:MichaelisRiskManagement.pdf
Size:1.13Mb
Format:PDF
Zusammenfassung
Englisch
Risk management is accepted as relevant for success of organizations and stability of the whole economy. Therefore, an organization of an appropriate risk management system is mandatory in many countries, especially for the listed companies. The risk management process is regulated by frameworks, such as ISO 31000:2018. However, organization and incentivization of risk management are not sufficiently researched, so that the normative recommendations are missing. This dissertation focuses on these aspects, especially on organization of risk management within firms, as well as optimal incentives and performance measurement for risk managers. The chosen methodology is agency theory, which is frequently used to analyze questions of entrepreneurial design, with results often implemented as basis for empirical research. In agency theory, the decrease in risk is usually associated with supervision, specifically with monitoring. Thus, the first step of this thesis is the analysis of supervision and monitoring literature. The requirements on modeling risk management in agency are presented and the available literature is reviewed in accordance to them. The main result is, that the existing literature barely covers the risk management. A reinterpretation is only possible for two articles. Transferable insights recommend a delegation of risk management as a specialized task to avoid inefficiencies. Moreover, the firm’s risk restricts the optimal firm’s size. Especially the risk aversion of the employees has high relevance in this context. In the second step, the thesis investigates hierarchical organization of risk management, with core results leading to guarded recommendation of a decentralized organization of risk management against a centralized one. Additionally, risk aversion proves to be a motivational factor for managers to engage in risk management. In its last step, the thesis discusses performance measurement in the context of risk management. The findings suggest, that designing the contracts of risk managers in the same manner and with the same performance measures as the contracts of other managers leads to inefficiencies. The reason is, that more precise measures elicit more effort by productive managers, but provide fewer incentives to risk-managing ones. This dissertation highlights the relevance of the topic to the organizations and addresses the existing research gap. It shows the effects of risk and effort aversion for risk management, especially depending on the chosen organizational structure. Practical implications can be summarized as recommendation toward a decentralized risk management structure. The managers are selected and placed in the hierarchy according to their aversion to effort and risk. Thus, this dissertation is a starting point for further analysis of risk management in agency and beyond.
Keywords: risk management; monitoring; agency theory; delegation; organizational design; incentives; performance measurement; simulation