Risk Assessment Report for Trading.com

This Risk Assessment Report for Trading.com analyzes the potential risks and pressure points faced by the company in terms of growth, culture, and information management. It discusses the impact of growth on performance, the influence of culture on entrepreneurial risk-taking, and the challenges in information management. The report also provides recommendations for risk mitigation and sustainability.

MBA402
Governance, Ethics and Sustainability
RISK ASSESSMENT REPORT
Name:
Date:

Background
Three year old Trading.com is about training in share investment and mentorship. Guided by
successful share investment, the company has a culture based on right mind, proper education
and support mechanisms. Established by Jospe Drake, the medium sized firm has 100 employees
within its branches across Brisbane, Melbourne, Sydney and Adelaide. In the midst of growth,
the company has increasing sales, hence greater need for improved operations to match company
capacity. Among the problems arising is inefficiency in service delivery due to employment
gaps, which places the company at a financial risk. Financial performance depends on effective
team work hence strategic management practices require changes in the existing business model.
Sustainability encourages the company to meet its present and future needs. Failure to address
challenges such as share investment for early retirement compromises its business needs. A risk
exposure calculator these and other needs in a risk assessment process.

Contents
Introduction.................................................................................................................................................3
Risk exposure calculator..............................................................................................................................3
Growth Pressure Points...........................................................................................................................4
Pressure for performance.....................................................................................................................4
Rate of expansion................................................................................................................................4
Inexperience of key employees............................................................................................................5
Pressure Points Due to Culture................................................................................................................5
Rewards for entrepreneurial risk taking...............................................................................................5
Executive resistance to bad news.........................................................................................................6
Level of internal competition...............................................................................................................6
Pressure Points due to Information Management....................................................................................7
Transaction complexity and velocity...................................................................................................7
Gaps in diagnostic performance...........................................................................................................8
Degree of decentralized decision making............................................................................................9
Conclusion.................................................................................................................................................10
Bibliography..............................................................................................................................................12

Introduction
Trading.com is a company in the investment service industry hence it needs a concrete approach
to risk management. Recognizing and managing the risks starts with the establishment of a
proper framework revolving around its employees as an integral part of this firm. Consequently,
its activities must also consider the impact on external stakeholders such as associates, customers
and the local communities. This report breaks down the risks by considering people and systems
operations. A risk exposure calculator looks at three pressures in this company in terms of
current and potential risks (Aven 2016). The growth effects, culture factors and information
management form the backbone for this analysis. The company has more consultants hence
financial burdens are bound to arise. This risk exposure mechanism allows managers to design
strategies that focus on economic sustainability through efficiency. Trading.com needs a risk
plan focused on anticorruption, anticompetitive, economic performance and market presence
elements.
Risk exposure calculator
When calculating the risk exposure in an organization, the impact and likelihood of the risk
forms the basis for analysis. Kou, Peng & Wang (2014) evaluate financial risks using algorithms
for information systems. In this analysis business intelligence is an analysis of multiple
objectives against organizational objectives. Sustainability is at stake in this company because
capital divestment is bound to take over investment. Such long-term risks could lead to
bankruptcy. From the risk assessment calculator below the number of times a risk factor occurs
shows the severity in terms of social sustainability. In this case, the business impact has positive
and negative influences on people. The sources of the risk reveal the highest from the least.

Below 10% is a low risk with little impact while 15-20% shows moderates (long term effects).
Above 20% represents severe risks (financial exposure, legal implications and losses).
Trading.com percentage % flow of risks
Growth Pressure for
Performance
25%
+ Rate of
Expansion
10%
+ Inexperience
of Key
Employees
30%
Score
21%
Culture Rewards of
Entrepreneurial
Risk-Taking
5%
+ Executive
Resistance to
Bad News
30%
+ Level of
Internal
Competition
8%
Score
14%
Information
Management
Transaction
Complexity
and Velocity
17%
+ Transaction
Complexity
and Velocity
4%
+ Gap in
Diagnostic
Performance
Measure 13%

18%
Total Score 16%
Figure 1: risk exposure calculator
Growth Pressure Points
Pressure points due to growth are common in fast growing companies. Setting ambitious goals is
a strategy for higher sales and profits but it also breeds potential risks (Kou, Peng & Wang 2014,
p, 8). Despite the fact that trading.com is experiencing growth its employees have challenges
with meeting expectations due to market trends. Unplanned risks such as market downfalls
influence performance pressure which may reduce creativity and innovation. Compromising
ethics for success stories jeopardizes the company’s reputation. Scandals about fictitious deals
and their effect on organizations points towards pressure placed on employees to perform
(Sadgrove, 2016). Top manager’s desire to put up a good image through aggressive employee
performance but this tends to lower motivation. The following pressure points arise:
a) Pressure for performance
Trading.com has diffusion of responsibility because managers continue to assign roles or
responsibilities explicitly. Corporate governance has principles that lay a concrete base for the
management to assign performance responsibilities. Compromising employment standards by
hiring new employees hinders high performance (Grant, 2016). Experienced personnel lack

motivation because there are no opportunities for growth. Employees also miss out because they
do not have a chance to own the processes part. Clear responsibilities enhance accountability and
reduce misunderstanding.
b) Rate of expansion
Asking questions about the decentralization of the company and market trends is one way to
identify this pressure point. For example the course share priced at $10000 with luxury gifts may
not produce favorable outcomes for a middle aged company. Managers should inquire about the
connection between the financial risks and these rewards for a better risk culture (Drennan.
McConnell & Stark, 2014). Measuring consequences of regional investment against the
individual risks creates awareness for other units.
b) Inexperience of key employees
The use of consultant personnel places high pressure on the regional managers because they have
to work within contracts. When this occurs, the motivation used in the aggressive sales targets
set for senior managers drains the lower level employees (De Jong, Parker, Wennekers & Wu,
2015). Consultants and senior managers lack motivation when they work in a team with varied
work experience levels. This explains why the CEO had to make changes on consultant’s fee
from $10000 course fee per client sign up, to include an additional base salary of $30000 per
year. If left untamed, special bonuses given to performing consultants, the expensive gifts and
luxury holidays may give rise to a ruthless competitive culture. Security risks also arise due to
dishonesty by non-permanently employed personnel. Written work agreements should emphasize
on compliance with company policies.

Pressure Points Due to Culture
A diversity policy accommodates for all level of posts in a firm. However, there is need for
specific targets on number of consultants with a focus on indicators like remuneration, job
responsibilities and available posts. The company level of pressure includes employee feedback
on processes based on motivational levels (Kilpatrick, Blizzard, Sanderson, Teale & Venn,
2015). The regional managers may feel a sense of belonging when the lager corporate strategies
are inclusive. The company lacks a clear definition of information sharing channels between
regional and senior managers. Risk assessment pressure points in this perspective could
recommend the creation of a board to address these pressure points:
a) Rewards for entrepreneurial risk taking
Entrepreneurial risk taking has an impact on the company’s financial position. Compensation
rewards the workers in order to attract them to the organization. However, dealing with “yes”
men and women who do not connect with the senior manager is a hindrance because it breeds
communication challenges, operation and process differences (Bryson, 2017). This is a potential
high risk score for managers who want to retain talent. The company needs a remuneration
policy to deal with internal pressure bound to cause a risk explosion arising from inequalities.
Failure to access performance records is a cost factor that wastes time and contributes to uncalled
for duties. The company needs a remuneration committee and a framework to reward managers
across all levels. Cash and non cash incentives could also support the optimization of business
value with a reasonable pay for shareholders too.

b) Executive resistance to bad news
Overconcentration on monthly performance data at the expense of company values leads to
failed objectives (Quirke, 2017). Businesses build their image through an effective
organizational culture. Late reports and failed reporting affects the CEO and senior manager’s
objectives. These are share investors with a creative and risk taking approach to business.
Therefore the independent creation of courses without team work support compromises the
quality of this autonomy.
b) Level of internal competition
Ethics in the corporate sector is about business principles. Results showing an increase in the rate
of failure in the new courses are a sign of an impending risk at the internal competition level. At
this pressure point, managers face ethical challenges that could hinder legal obligations. The
company needs a code of conduct for recruitment, management and employment termination
terms. Side effects of competition influence the customer’s perception therefore engaging in
business with “yes” men becomes a risk. In trading.com, internal competition breeds a ground
for exploitation and fraudulent dealings. Regulations prevent unethical payments and bribes.
Pressure Points due to Information Management
a) Transaction complexity and velocity
Pressure points arise in an organization or company when there is faster growth that exceeds
company. Accommodating the new increase in the growth process leads to optimization based on
employee performance standards. In trading.com the educational experience plays a significant
role in the hiring process. However, addressing complaints from customers and staff through
systems analysis facilitates for a smooth process (Renn, 2017). Structuring the board adds value

according to company size, framework and duties. The middle aged company needs executive
and non executive board members for validity and verification of processes. Therefore, managers
should consider changes in knowledge execution, documentation design and dispersal.
Information Management pressure points prevent chaotic dispersal of information. A company
that needs an innovative way to creative information sharing suffers from poor distribution of
business profits when hidden losses emerge leaving a discontent team. Short term employees
may not participate in shared loses but long term workers feel the impact. An environment for
growth measured by compensation also needs growth focused strategies for creativity and
innovation. Financial performance, low confidence, compromised company reputation and
hunger for greater gains breed the desire for forged alliances, false promises and poor rewards. In
the end, misrepresentation of the company objectives jeopardizes customer satisfaction.
When competitors and regulators complain of fluctuations in value assets and unexplained
changes in finances the company needs accountability. The use of reliable estimates prevents
potential risks from mismanagement of transactions which could lead the company to bankruptcy
(Reason, 2016). A systems approach to asking questions about precision reduces anomalies for
timely risk management data.
b) Gaps in diagnostic performance
An increased transaction in sales is a sign of performance but company objectives should
encourage honesty as part of its ethics. Failure to capture integrity as part of organizational
strategies compromises the growth factors (De Jong, et al., 2015). The company needs an
effective system to check on sales across different branches, quality of sales and backlogs.
Delayed reporting is a sign of inappropriate diagnostic tools hence this compromises accuracy in

information. Independence in decision making and allocation by the top managers should also
have responsible action such as a system for reporting unlawful acts.
In trading.com, regional managers face higher risks in information sharing. Corporate strategic
development identifies danger zones through improved interactions, diagnostics, belief systems
and controls. This brings out changes in the policy mechanisms describing practices. Consultants
work on contract basis hence it may not be safe for these employees to handle confidential
company data. In order to encourage learning, a monitoring system for gathering information is
ideal
Gaps in information flow raise questions about the integration of new technology to support the
existing risks in ethical codes and disciplinary action. Mitigating risks within the high risk areas
includes using systems to protect whistleblowers.
c) Degree of decentralized decision making
Internal sources like employees face impending risk that contributes to reduced financial
performance. Dwindling sales or profits is a pressure point that supports solutions for a dynamic
market for this middle level company (Bernile, Bhagwat & Rau, 2017). An interactive systems
design identifies three pressure points for use in the risk exposure calculation.
The risk zones highlight the impending danger zones designed for preventive actions. Modeling
a solution using strategies such as levers of control describes solutions for each level (Kruis,
Spekle, & Widener, 2015). For example, external controls would develop trading.com assets
against its interactions in the market system, for sales pricing and the best economic model.
Consequently, customer satisfaction is a pointer to risks in the boundary and belief systems.
Customer complaints control risks and levers of control limit risks through positive conduct from

consultants. Figure 1 explains this with a focus on a decentralized system. This explains why the
company attracts customers but experiences reduced calls of interest when trying to retain
business deals.
Boundary system Belief systems
Diagnostic systems Interactive control system
Figure 2: Four levers control (adopted from Kruis, Spekle, & Widener, 2015)
Mitigating the risks
External sources such as competitors push companies into the adoption of sales and profit goals.
Distribution challenges hinder targets and lowers performance because of external risks (Beck,
Avital, Rossi & Thatcher, 2017: Rasnacis & Berzisa, 2017). Redefining the mission statements
to incorporate consultants shapes the corporate belief system. Visible actions such as these
reduce pressure by safeguarding the company reputation. However, intense pressure to perform
at all costs leads to misrepresentation by employees who target sales. At a higher risk, employees
face the temptation of making fictitious results in order to please managers.
Levers of
Control

Conclusion
A corporation is a conglomerate of shareholders from internal and external sources. Each
stakeholder has liabilities or obligations that are prone to risks. High scores at the pressure points
mean higher risks. A percentage analysis of the company risks identifies future loses even when
there are current gains. Measuring the frequency of bad returns in a middle aged business like
trading.com identifies a higher rate of failed deals in the midst of mounting pressures. Quality
governance is management with a focus on financial growth and optimization strategies. Ethics
is part of managerial strategies used to analyze trends in the profits, revenue and existing
opportunities. Measuring growth without putting into consideration the risks is a recipe for
failure because existing and potential risks arise from different levels. The company faces risks
in departmental and organizational levels hence the need to engage a new organizational culture
to deal with unhealthy competition while encouraging a ‘can-do’ l culture. Creating a balance
between the existing variables of quality and performance also includes a responsible corporate
culture.

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