Governance Ethics and Sustainability

This report explores the concept and factors of risk assessment regarding an organization using the case study of Trading.com. It evaluates the risk aspects related to growth, culture, and information. The findings indicate that Trading.com falls into the medium risk category and needs an effective strategy to mitigate those risks.

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Governance Ethics and Sustainability
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Executive Summery
The aim of this report is to explore the concept and factors of risk assessment regarding an
organization. In order to do that, the case study of Trading.com has been taken for
observation and the risk factors that are threatening the organization are assessed using the
Risk Exposure Calculator tool. The report evaluates the risk aspects that are related to
growth, culture and information as applicable to the organization. Through the discussion, it
is seen that the risks regarding the growth of the company has high risk factor, the expansion
aspect and the information risks have moderate risk factor for the company. In the conclusion
of the assessment, it is indicated that trading.com falls into the medium risk category and
only need an effective strategy to mitigate those risks. For successful growth and steady
profit turnover of any organization, it is necessary that its risks are identified and are
diminished as effectively as possible.

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Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
Trading.com...........................................................................................................................3
The Risks Faced by Trading.com...........................................................................................4
Risk Points Due to Growth................................................................................................4
Pressure Points Due to Culture..........................................................................................6
Pressure Points Due to Information Management.............................................................8
Results of the Assessment......................................................................................................9
Conclusion................................................................................................................................10
References................................................................................................................................11
Appendix 1...............................................................................................................................13

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Introduction
Risk Management has become one of the major issues that an organization must
evaluate at regular intervals. The way a company handles that different risk factors that might
affect the company negatively and how they eradicate those threats determines whether the
company will succeed or fail (Lam 2014). It is the duty of the managers as well as the
leaders, to determine the major cause that might become a potential risk factor for the
company at the initial stage and try to mitigate them as soon as possible (Bessis 2015). To do
that, it is necessary that the leaders and managers perform a risk assessment for their
organization not only to determine the possible risks that might threaten the company, but
also the ways in which they can be managed (Bromiley et al. 2015). For this purpose, a new
tool, the “Risk Exposure Calculator”, has become quite popular in the industry that enables
the users to calculate the possible risks that might be faced by them (Olson and Wu 2015). In
this report, the situation of trading.com has been analyzed and their potential risk aspects
have been evaluated as well, based on their score on Risk Exposure Calculator. Moreover, the
implications of the findings are discussed and probable solutions and recommendations are
provided for the organization.
Discussion
Trading.com
Trading.com is an investment consultant and planner. They provide the customers
with mentoring services and offer various courses for investment. They believe in the motto
that everybody has the ability to become successful in investment if they possess correct
mind set, education and a level of support. They follow this mantra and provide the
customers with facilities for investment, which according to their claim, will help them,

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secure a large savings and thus, enabling them to retire earlier. Following this mindset has
become a reason for success for the company and they are on the path of steady growth. In
spite of that, the employees working in the organization are concerned with the growth of
Trading.com and have negative opinion about it. For instance, Jospe Drake, the owner of
Trading.com, sees this growth and business expansion of the company in a positive aspect
while many others in the organizations have a pessimistic point of view.
The Risks Faced by Trading.com
According to Brustbauer (2016), risk management is necessary for an overall growth
of an organization. An organization face various risks and their mitigation is extremely
important. This will lead to the development of business of Trading.com. It is necessary for
the company to determine its potential risks. For Trading.com, the sudden growth that they
are facing the aspects that come related to it can be considered as risk factors for the
company. These risks are further classified broadly into three categories-
 Risks points due to growth
 Risks points due to culture, and
 Risks point due to information management
Risk Points Due to Growth
In modern economy, the majority of the organizations focus on attaining a greater
height of financial as well as other kind of developments (Mikes and Kaplan 2014). Despite
that, while going through the growth process, this factor is a risk as mostly, organizations are
not completely sure whether they should put emphasis on the aspect of quality or quantity for
successful growth of the organization (Eckles, Hoyt and Miller 2014). The risks majorly
related to growth process can be classified into following segments-
 Risk due to pressure for growth

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 Risk due to pressure for expansion, and
 Risk due to the inexperience of the employees
Risk due to pressure for growth
The services and course offerings of Trading.com has gained a sudden momentum in
their demand in the industry. Drake, the owner, always was focused on the individual sales
made by the employees. Thus, he would set aggressive goals and targets for each employee to
increase their sales. While permanent employees generally work in a fixed salary and
commission is given depending on the performance of the employee, none of the employees
in Trading.com had any fixed salary. Rather they earned their money through commission
that solely depended upon the sales that they had made. This factor is significantly connected
to the sudden spurt of growth for the organization while this factor has also forced the
employees to adopt unfair and immoral means to reach their targets. As their earnings
depended upon the number of sales for courses and other services, the employees were forced
to become more competitive than it is healthy (Gatzert and Martin 2015). This is a prime
threat for the company and that is the reason why the organization has scored 3 in this aspect
in the Risk Exposure Calculator (Appendix 1).
Risk Due to Pressure for Expansion
Trading.com is experiencing an increasing demand for their courses and services that
was not expected by them. Currently this poses a challenge for them, as the resources that the
company now have are limited in nature. Moreover, the organization presently is working
with 100 employees. In spite of that, they are unable to direct the workforce effectively. This
has resulted to further recruitment of new employees that are inexperienced and unskilled.
The lack of necessary skill and inexperience in this field has led to a gradual decline of the
quality of the services that were provided by the organization until date. This problem can
potentially harm the company by affecting the future prospects of the organization adversely

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(Pellegrino, Vajdic and Carbonara 2013). This discussion points to the fact that the company
faces a serious threat from the factor of expansion and thus has scored 4 in the Risk Exposure
Calculator for this index (Appendix 1).
Risk Due to Inexperience of Employees
In the opinion of Landsbergis, Grzywacz and Lamontagne (2014), the offered service
quality of any organization has a direct relation to the level of expertise as well as their ability
to effectively handle the consumers. In this aspect too, the company, Trading.com is facing
quite a large amount of risk as it has already been established that the new recruitments in
their workforce lacks the necessary skills and experience that are needed to successfully carry
out their job roles. They also fail to provide post sale care that the customers expect.
Evidently, the customers of Trading.com has complained that any good and friendly
treatment that they have received from the employees of the enterprise are until the payment
is done. Post payment and sales, the employees did not even reply to the queries and requests
made by them. This is problematic for any enterprise, as this will affect the brand identity and
image of the organization in a negative manner. Moreover, the satisfaction level of the
customers will decrease and their loyalty to the organization will dwindle. Thus, in this
context the company has received the score 2 in the Risk Exposure Calculator. (Appendix 1)
Pressure Points Due to Culture
Researchers have expressed the opinion that the organizational culture has direct
correlation with the level of performance that the employees show (Fragouli and Ourolidis
2013). Positive cultural practice is said to increase the level of job satisfaction among the
employees in turn attrition rate in the organization decreases (Oehmen et al. 2014). Thus, it is
clear that any use of negative organizational culture will have adverse effects within the
organization. On this aspect, Trading.com faces some risks that has been divided into three
categories-

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 Risks due to rewards for entrepreneurial risk taking
 Risks due to executive resistance to bad news
 Risks due to level of internal competition
Risks Due to Rewards for Entrepreneurial Risk Taking
For the factor of entrepreneur risk taking, the enterprise, Trading.com is faced with a
risk of significant potential. The reason behind this risk is highly competitive culture of the
company. The owner, Drake believes in competitiveness and has thus the culture within the
company is extremely competitive and performance of an employee is analyzed based on the
number of successful customers that they brought into the company. Due to this competitive
demand, the employees engage in unethical behaviors and practices so that they can increase
their sales. Moreover, the CEO is dependent upon the Regional manager of the company
regarding the information on the company though mostly, the regional manager is generally
unable to provide any information that are concrete in nature. Due to this, Trading.com has
scored 3 in this index in the Risk Exposure Calculator (Appendix 1).
Risks due to Executive Resistance to Bad News
The way an organization reacts to any bad news and the way it creates a solution to
the problem, indicates the prospect of the company (Nazir et al. 2016). In case of
Trading.com, the resistance level that the company shows is extremely high as in many cases
the bad news are not even relayed to the upper authorities. For instance, in Trading.com the
employees generally have the responsibility to demonstrate to the consumers about the
services and courses that they offer. The company, however, has given guidelines regarding
the method of the demonstration thus curbing the independence of the employees to create
demonstrations as necessary. Thus, the demonstration s that are being performed by the
employees are practiced with those guidelines and only the successful cases of them are being

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relayed to the upper management. Due to this reason, Trading.com has scored 2 on the Risk
Exposure Calculator (Appendix 1).
Risks Due to Level of Internal Competition
In Trading.com, the culture suggests that the appreciation of an employee is solely
dependent upon the performance of them. This has led to the development of intense internal
competition and increased used of unethical, unfair and immoral means in order to be able to
show better performance. This practice not only is detrimental for internal office culture but
also to the brand image and perspective regarding the company (Frigo and Læssøe 2014).
Thus, in this scenario as well, Trading.com is significantly at risk and thus, has scored a 3 on
the Risk Exposure Calculator (Soin and Collier 2013).
Pressure Points Due to Information Management
Trading.com is facing significant risk when it comes to ineffective management of
information. Based on this aspect, the risks that they face here can be classified into further
three sections as well-
 Transactional Complexity and Velocity
 Gaps in Diagnostic Performance
 Degree of Decentralized Decision Making
Transactional Complexity and Velocity
Trading.com needs to attract customers for their offered courses. In order to do that
they arrange seminars free of cost to demonstrate the services that they offer. It is necessary
to note here that the company has no guidelines regarding the said seminars and for that
reason, the employees adopt methods that will enable them to achieve best results. However,
it is mostly observed that the methods that the employees are adopting are unfair practices

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and the effects that they have are negative for the company reputation. Due to the significant
contribution of this fact to the risks faced by the company, Trading.com has secured a score
of 2 in this context (Appendix 1).
Gaps in Diagnostic Performance
A true assessment of employee performance does not take only the individual
performance as the only factor. The contribution that an employee makes for the betterment
of others as well as the company as a whole is also a significant factor in the performance
appraisal process (Teller and Kock 2013). The rise of aggressive competitive culture within
the organization has grown due to the company’s policy of considering the individual
performance and sales in a given month. In this aspect, the company has scored 3 (Appendix
1).
Degree of Decentralized Decision Making
Trading.com has the structure of a decentralized organization where the employees
are given the independence as far as dealing with the customers, and making a sale is
concerned. This has resulted to the employees’ lax behavior regarding the rules and norms as
their sole focus is to increase their sale whatever the process may be. Trading.com has scored
2 in this aspect.
Results of the Assessment
The company, Trading.com has scored 25 in Risk assessment in aggregate (Appendix
1). The score indicates that the position of the company is in the caution zone and they need
to deploy strategies that will mitigate all the risk factors and negative effects that threatens
the company presently.

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Conclusion
From the above discussion, it can be easily concluded that potential risk factors are
truth for every organization. The organization’s way of handling those risks and the method
that they adopt to alleviate those, indicates the future prospect of the enterprise. In most
cases, it has been observed that an organization has the potential to make much profit if they
can successfully reduce the risks that are threatening to overpower them. Additionally, the
evaluation of risk factors for any organization enables the owners and managers to create a
risk management strategy that will be most effective for the organization.

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References
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Bromiley, P., McShane, M., Nair, A. and Rustambekov, E., 2015. Enterprise risk
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276.
Brustbauer, J., 2016. Enterprise risk management in SMEs: Towards a structural
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Eckles, D.L., Hoyt, R.E. and Miller, S.M., 2014. Reprint of: The impact of enterprise risk
management on the marginal cost of reducing risk: Evidence from the insurance
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Fragouli, E. and Ourolidis, G., 2013. The effect of culture in risk perception and its
contribution to the failure of strategic alliances. International Journal, 4(6).
Frigo, M.L. and Læssøe, H., 2014. H ow can organizations manage strategic risks in a
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Gatzert, N. and Martin, M., 2015. Determinants and value of enterprise risk management:
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Lam, J., 2014. Enterprise risk management: from incentives to controls. John Wiley & Sons.

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Landsbergis, P.A., Grzywacz, J.G. and Lamontagne, A.D., 2014. Work organization, job
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characteristics on shareholders assessment of risk for small and large firms: Evidence from
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Oehmen, J., Olechowski, A., Kenley, C.R. and Ben-Daya, M., 2014. Analysis of the effect of
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Pellegrino, R., Vajdic, N. and Carbonara, N., 2013. Real option theory for risk mitigation in
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Appendix 1
Representation of the Risk Exposure Calculation for the company Trading.com
Figure: Figure 1
Source: Created by the Author