Risk Assessment of Trading.com's Business Activities

This report provides a detailed assessment of the risks existing in the business transactions of trading.com and identifies the possible risks related to business activities. It also includes a risk assessment framework, summary of the content, subject, and more.

Running Head: GOVERNANCE, ETHICS AND SUSTAINABILITY
Governance, Ethics and Sustainability
Name of the Student
Name of the University
Author Note

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GOVERNANCE, ETHICS AND SUSTAINABILITY
Table of Contents
Introduction......................................................................................................................................3
Risk Assessment..............................................................................................................................4
Possible risks of business activities of trading.com.........................................................................5
Strategic risks...............................................................................................................................5
Financial risks..............................................................................................................................5
Risk assessment framework.............................................................................................................6
Threat likelihood..........................................................................................................................7
Threat likelihood..........................................................................................................................7
Magnitude of risk impact.................................................................................................................7
Impact because of Rapid growth..................................................................................................8
Risks because of organisational culture.....................................................................................11
Risk factors because of lack of information communication.....................................................13
Reference List................................................................................................................................16

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Introduction
This analytical report make a detailed assessment of the risks existing in the business
transactions of trading.com which the organisation is most likely to be facing while indulging in
their customer service. The ultimate motive in this report is the identification of these risks
related with business activities, so that a suitable assessment of the risk can be conducted with
relevant risk assessment framework. The provided case study shows us that trading.com has
experienced a dynamic expansion in terms of customer base. However, when this Rapid
expansion of customer base is contrasted against the organisational capacity of hiring and
involving new employees it will be observed that the existing workforce is not able to deal with
this constant pressure of increasing customers and parallel increasing sales pressure (Bessis
2015). This business risk becomes highly strategic because of the fact that the regional managers
are not motivated enough to deal with the high pressure of the customers and mostly entrusts the
lower level employees to deal with problems related to customer service.
Analysing the scenario, from the provided case study, this report will identify why it is necessary
to apply proper corporate strategy in this organisation. However, the hindrance to applying a
proper corporate strategy to the organisation is lack of dedicated communication channel for
mutual Information sharing between the employees or between the senior managerial members
and the employees. On the contrary, it has also been observed that because of the increasing
pressure of the number of customers, the quality of customer service provided by the Limited
workforce is decreasing and as a consequence the number of negative customer feedback are also
increasing (Bolton, Chen and Wang 2013). The case study shows that the major grievance of the
clients is that they are behaved well up to the point when they sign up for the concentration

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course. While conducting the risk assessment and analysis, these are the specific risk factors and
situation elements which will be considered in this report.
Risk Assessment
Research evidence provided by Dionne (2013), identify that all organisations undergoes risk
which can help them reach the path of success. Risk factors are also identified as the reason
behind high profitability of a business event as well as the determining factor behind any
negative business consequence faced by the organisation. Hence, while considering analysis of
any organisation, specific business events related to the kind of risks ok, considerable for
analysis, should be considered only. Hence, risk management can be perceived as a technique
which syncs in Technology, methodology as well as a Framework for management of such risks.
Summarising the ideas present in the previous section, it can be identified that the risk
management protocol of this report will identify what could have been possibly wrong with the
organisation, making an assessment of the risk which could have been dealt with as well as
delivering strategies which can help in dealing with these risks. In context to risk analysis, it can
be identified that Kardes et al. (2013), strongly support the idea that coming to the methodology
of business, risk management can be considered as integral part of the strategic management of
any organisation. Lam (2014), also identify that risk management procedures help the company
to identify the the individual risk that has been facing the organisation, for evidence trading.com
needs to understand the fact that although their plant-based is big and it is increasing, yet there is
high risk because the organisation lacks the capacity of dealing with such a big client base. In
this report, a methodological pattern has been followed for Risk identification, with respect to the
feedback of clients regarding the consultancy course quality as well as keeping in focus the
management initiatives that has been incorporated by the company for client retention.

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In a similar way, the risks will be analysed in this report on the basis of the likelihood of the
occurrence of any negative event in context to those risks. Based on the assessment, analogical
Strategies for responding to risk events will also be provided.
Possible risks of business activities of trading.com
The most feasible risk categories applicable towards trading.com are strategic risks, operational
risks as well as financial risks.
Strategic risks
As identified by Masini and Menichetti (2013), consultancy services provided by the company
can influence the investment outcome of thousands of customers. So it is required that the market
competition in this sector works effectively in order to motivate the organisations to provide best
services to their clients. Coming to the context of risk, the competition facing the company is a
major challenge. In context to this risk factor McNeil, Frey and Embrechts (2015), comments
that in the business of investment consultancy, there is high risk of customer involvement and
close monitoring of the quality of consultancy course provided. From the perspective of the
clients, it is also very challenging to be able to assess and identify information regarding the
evaluation quality of the current investment and consultation quality as well as decide if it is
better off to be using any other consultancy provider. This is the strategic risk existing in this
industry. However, the in capacitance of the customers to decide the quality of consultancy as
well as the lesser chances of switching on to any alternative consultancy provider after
registering with one agency makes this strategic risk, the risk of medium standard in the share
investment consultancy service sector.
Financial risks

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The ultimate financial risk undergoing trading.com is the payment fraud from the end of
customers for increase in interest charges upon the business loans. However, in addition it can be
commented that financial risks related to the organisation is relatively low keeping in mind that
the sales margin already attained by the organisation is quite high which sheds light on the fact
that customers generally do not keep payment pending for or the rate of defaulting customers in
terms of payment is very less.
There are other vital risks, which needs to be considered also. Sundararajan, Bhasi and Pramod
(2017), identifies in context to a similar business situation, as evident in the case study that the
critical risk of not maintaining sufficient number of employees, cover as well as employee safety
is really integral to the business outcome. This case study identify that regional managers in the
company do not have the sense of managing large corporations and there is no dedicated channel
of communication for sharing of information between the employees or within employees and
the higher management. Another factor of operational risk regarding the business activities of
trading.com is that the consultants are always under high pressure of achieving big sales targets
set for them by the senior managers without any consultation or input from the consultants or the
regional managers. Analysing this situation, it can be commented that the attitude of the senior
management of this organisation is ruthlessly progressive and competitive (Arefi,
Abeygunawardana and Ledwich 2016). Under the excessive pressure of meeting individual
targets, the quality of service provided by the consultants to the clients naturally gets degraded.
Hence, staff management is an area which is under big operational risk. Considering All the
above discussed factors, it can be specified that the risk involved in management of employees in
the company is relatively high.
Risk assessment framework

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The following model of risk assessment is applied for or analysing the risk factors related with
trading.com.
Risk=threat likelihood × magnitude of impact
Threat likelihood
Threat likelihood Impact
Low Medium High
High (1.0) (10X1.0=10
)
50X1.0=50 (100X1.0=100)
Medium (0.5) (10X1.5)=5 (50X0.5=25) (100X0.5=50)
Low(0.1) 10X0.1=1 50X0.1=5 100X0.1=10
Threat likelihood
Likelihood Definition
Employee
management
risk is high
Which can be commented that when there is high impact possibility of a risk,
chances are higher that it will impact the business in a negative way
Strategic
risk is
medium
When the level of risk is medium, the impact can be either positive or negative ,
which means there can also be opportunities for large trade Returns.
Financial
risk is low
Low level of risk generally cannot create high impact

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Magnitude of risk impact
Impact because of Rapid growth
Impact level (score) Analysis Score
Organisational pressure for
high performance is a high
level of risk
Risk associated with the
current operational scenario
in the company is high
because of the dynamic
performance related to the
sales that has been executed
by the organisation in a short
time period. This can be open
challenging because it has
already been evident that the
capacity of handling high
pressure of clients is missing
(Leitch 2016). Another
important fact regarding the
consultation service provided
by the company is that the
ranking of the consultants and
their performance is done on
the basis of sales volume
accumulated by them. This
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puts high pressure on their
performance.
Risk of rapid expansion rate
is high
It can be commented that the
company has achieved a big
client base but there is risk in
this high rate of expansion
because the capacity level of
the company is low. Even
though they are expanding at
a dynamic rate, internal
management is weak. The
case study shows that the
regional management has
very less knowledge about
corporate management and
there is a big communication
gap between managers and
executive or operational level
employees also (Kerzner and
Kerzner 2017). The
concentration techniques are
not understood by the
regional managers and that is
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why they are not able to
accumulate data regarding the
performance quality of the
Consultants. Analysing the
above mentioned factors it
can be commented that
although the business is
providing profitable returns,
lack of internal capacity and
weak management is big
hindrance towards future
sustainability.
Experience of of important
employees is a medium level
risk.
The case study shows that the
company is operating with
Limited capability of hiring
and induction. This is why, it
will be better to stop the
employment of new
candidates with almost no or
negligible experience and
instead. Employees with
preferred skills for the
concern of cost.
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Risks because of organisational culture
Rewards of undertaking
entrepreneur risks (medium)
Evidently entrepreneurship is
rewarding, but in the initial
business stage. It is
impossible to ignore struggle.
However, after the initial
phase, trading.com achieved
remarkable growth in in small
time period. The operations
are handled by the
consultants who provide
service to the clients. In turn
the consultants are managed
by the regional managers who
motivate them to meet the
sales target. Thereby, it can
be specified that being a start-
up company the organisation
to great risk in serving a big
client base with Limited
capacity. From that
perspective, the reward of
entrepreneurship that they
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have received is implausible.
Executive resistance is high
level risk
It has been identified that hire
managers and executive
managers in the company
have to deal with another line
of staff belonging to middle
and lower level of
management. Managers have
no proper communication
framework for consultants as
they are only dealing with the
sales figures achieved by the
Consultants. This is a very
risky operational method.
Kerzner and Kerzner (2017),
specifies that successful
managers need to
complement operational
activities by identifying
business issues. They have to
come up in order to solve
internal issues which will
help the company to progress
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in the long run.
Risk of internal competition
is high
Analysis shows that
competition for meeting the
sales target involving the
consultants is relatively high.
In this context Arefi,
Abeygunawardana and
Ledwich (2016), mentions
that the competition level in
the internal business is very
high and the consequence
might be a good result
however there can be the risk
of employee turnover as a
consequence of that. In this
organisation, the internal
operating groups are
constantly in competition
with each other for achieving
their sales target set forth by
the managers.
100
Risk factors because of lack of information communication

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Kind of risk Analysis Score
Complexity and velocity of
transaction
The level of complexity in the
internal transaction of the
company is high and so is the
velocity. This is why; the risk
related with this is low.
However, even though
regional managers are taking
care of the overall
operations , majority of
responsibilities are left on the
shoulders of the middle level
managers who are impeded
with a poor communication
channel (McNeil, Frey and
Embrechts 2015). Hence,
operational as well as
transactional risk might come
up in future because of this
whole communication
framework
Gaps in the level of
Diagnostic performance is
It can be specified that the
identified gaps is low because
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low compared to the overall
industrial performance, the
individual performance of
this company is very high.
Remarkable client base as
well as monetary profit has
been acquired by the
company in a short time span
Risk of decentralization of
decision making is of
medium level
When the decision making
process in a business
involving large number of
members, there are large
number of individual
activities of relative low risk.
However Arefi,
Abeygunawardana and
Ledwich (2016), identify that
this can be challenging since
the authority and its impact
on individual operational
members is low.
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Reference List
Arefi, A., Abeygunawardana, A. and Ledwich, G., 2016. A new risk-managed planning of
electric distribution network incorporating customer engagement and temporary solutions. IEEE
Transactions on Sustainable Energy, 7(4), pp.1646-1661.
Bessis, J., 2015. Risk management in banking. John Wiley & Sons.
Bolton, P., Chen, H. and Wang, N., 2013. Market timing, investment, and risk
management. Journal of Financial Economics, 109(1), pp.40-62.
Dionne, G., 2013. Risk management: History, definition, and critique. Risk Management and
Insurance Review, 16(2), pp.147-166.
Kardes, I., Ozturk, A., Cavusgil, S.T. and Cavusgil, E., 2013. Managing global megaprojects:
Complexity and risk management. International Business Review, 22(6), pp.905-917.
Kardes, I., Ozturk, A., Cavusgil, S.T. and Cavusgil, E., 2013. Managing global megaprojects:
Complexity and risk management. International Business Review, 22(6), pp.905-917.
Kerzner, H. and Kerzner, H.R., 2017. Project management: a systems approach to planning,
scheduling, and controlling. John Wiley & Sons.
Lam, J., 2014. Enterprise risk management: from incentives to controls. John Wiley & Sons.
Leitch, M., 2016. Intelligent internal control and risk management: designing high-performance
risk control systems. Routledge.
Masini, A. and Menichetti, E., 2013. Investment decisions in the renewable energy sector: An
analysis of non-financial drivers. Technological Forecasting and Social Change, 80(3), pp.510-
524.

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McNeil, A.J., Frey, R. and Embrechts, P., 2015. Quantitative Risk Management: Concepts,
Techniques and Tools-revised edition. Princeton university press.
McNeil, A.J., Frey, R. and Embrechts, P., 2015. Quantitative Risk Management: Concepts,
Techniques and Tools-revised edition. Princeton university press.
Sundararajan, S., Bhasi, M. and Pramod, K.V., 2017. Managing software risks in maintenance
projects, from a vendor perspective: A case study in global software development. International
Journal of Information Technology Project Management (IJITPM), 8(1), pp.35-54.