【正文】 as well as to handle them. For this, as for the whole process, the characteristics of SME have to be taken into account, too.Therefore the suggested overview is a first and prehensive mean for analysing and monitoring the overall financial risk situation of SME. It is designed to fulfil their needs as it takes their characteristics into account and can be the base for further research in the field of SME risk management.1. IntroductionThe first section provides an introduction to the thesis. Hereby the context of the thesis, the research question and the structure of assessing the topic as well as its’ limitations will be presented.. Context and research question?Risk and economic activity are inseparable.“ (Liekweg amp。 Weber, 2000, )Every business decision and entrepreneurial act is connected with risk (Stroeder, 2008, ). This applies also to business of small and medium sized enterprises as they are also facing several and often the same risks as bigger panies. In a real business environment with market imperfections they need to manage those risks in order to secure their business continuity and add additional value by avoiding or reducing transaction costs and cost of financial distress or bankruptcy (Hermann, 1996, Oosterhof, 2001, ).However, risk management is a challenge for most SME. In contrast to largerpanies they often lack the necessary resources, with regard to manpower, databases and specialty of knowledge to perform a standardized and structured risk management. The result is that many smaller panies do not perform sufficient analysis to identify their risk. This aspect is exacerbated due to a lack in literature about methods for risk management in SME, as stated by Henschel (2008):“The literature on risk management being available mainly concerns the implementation in very large joint stock panies.” (Henschel, 2008, )Although their economic and social impact is important and they differ in many aspects from larger corporations, most empirical studies about corporate risk management focus on the latter ones (Vickery, 2006, 。 Rautenstrauch amp。 Wurm, 2008, ).The two challenging aspects with regard to risk management in SME are therefore:1. SME differ from large corporations in many characteristics2. The existing research lacks a focus on risk management in SMEThe theory about the risk management process is not sufficiently applicable to small and medium sized panies, as it has to consider their characteristics and needs. With focus on German SME and their internal financial risks, this thesis will therefore try to convert the theory of financial risk management into practice in a way that it is applicable for small and medium sized panies. The following research question will be central to this work:2. Theoretical overviewIn the following the theoretical background for the thesis will be given. For this first the main terms of the thesis will be defined, after that risk management, how it is found in theory, and especially financial risk management will be presented.. Definition of main termsFor a better understanding of the theory, first of all the terms risk, risk management and small and medium sized enterprises, will be defined as they are understood in this work.. Definition of riskWhen doing business, constantly decisions, where the outes cannot be foreseen with certainty due to inplete information, have to be made (Stroeder, 2008, ). This uncertainty connected with every kind of business activity is risks. Although this term is of central importance, there does not exist an overall definition of the meaning of risk (Wesel, 2010, ).As a first step for the definition, similar terms, which are often used exchangeable in every day’s speech, need to be distinguished, namely: uncertainty, danger and risk. Uncertainty is used when the outes of future events are uncertain and the different states cannot be connected with probabilities of occurrence (Stroeder, 2008, ) The term danger in general stands for unplanned and unpredictable outes having a negative impact on something. Like those two terms, risk summarizes events that are uncertain regarding their oute. The difference is that in the case of risk, the outes can be connected with a probability of occurrence (Stroeder, 2008, ).Furthermore, risk can be split into two categories. On the one hand there are pure risks or systematic risks, which cannot be influenced by the manager and are independent of business decisions. On the other hand there are unsystematic risks, which are the result of managerial decisionmaking and can either have a negative or a positive oute (Stroeder, 2008, 。 Retzlaff, 2007, ).However there are differences in the definitions of risk. First of all some include also possible positive outes of a risk, also referred to as upside risks or chances. Other only define the possible occurrence of negative outes, or downside risks, as risks because they are more in the focus of the management (Dhanini et al., 2007, ). The inclusion or exclusion of chances is not the only difference in the mon definitions. They range from (negative) deviations of planned outes, over danger of making wrong decisions to danger of losses due to information lacks (. Nassauer amp。 Pausenberger, 2000, 。 Hermann, 1996, ). When focusing on the mon features of the definitions, risk is the possibility of deviation from a planned oute or goal. This implies that all business is connected with risks resulting from the fact that future states of the world and outes of decisions can only be predicted. As business activities are uncertain regarding their oute and this uncertainty implies risks to the profit of the firm, a pany needs to manage its’ risk exposure (Retzlaff, 2007, ). . Definition and aim of risk managementThe term management can be derived from the Latin word manus (= hand) and means handling. In a business context management is the organisation, administration and leadership of