E-Commerce Risk Analysis : Amazon Assignment 2022

Running head: E-COMMERCE RISK ANALYSIS-AMAZON
E-Commerce Risk Analysis: AMAZON
Name of the Student
Name of the University
Author Note

1E-COMMERCE RISK ANALYSIS: AMAZON
Table of Contents
Introduction....................................................................................................................2
Company background: Amazon.....................................................................................2
Business profile..............................................................................................................2
Overview of Amazon’s e-commerce activities..............................................................4
Need of cyber security in Amazon.................................................................................5
Identified risks and potential impact..............................................................................6
Conclusion......................................................................................................................9
Reference......................................................................................................................10
Appendix......................................................................................................................12

2E-COMMERCE RISK ANALYSIS: AMAZON
Introduction
The significance of risk analysis in an organization is huge that supports the company
in analyzing their potential threat factors and risks in the operating environment. With
development of the technology and e-commerce, viability of data and cyber security needs
have increased. Hence, in order to analyze the risks associated with the company in operating
in the e-commerce field, Amazon has been considered to develop the risk assessment report.
This report focuses on briefing a company overview of Amazon and the products and
services it is dealing with and then analyze the potential risks based on their performance in
the world market.
Company background: Amazon
Amazon is an on-line e-commerce platform where number of marketers, buyers and
sellers trade products for money. The company was founded in Seattle, Washington by Jeff
Bezos in the year 1994. The industrial section it operates in are cloud computing, artificial
intelligence, e-commerce, consumer electronics and digital products (Amazon.com. 2019).
The company have secured a position in the market with innovation in technology at a mass
scale. Amazon is considered to be the world’s largest site of e-commerce, biggest player at
the artificial intelligence assistance and cloud computing aspect as per market capitalization
and revenue records (Chou, 2015).
Business profile
Amazon.com, Inc.
Headquarters: 410 Terry Ave N Seattle, Washington
Key personnel: Jeffrey P. Bezos (CEO)
Jeffrey A. Wilke (CEO-WC)
Andy Donkin (GH)
Douglas Gurr (OH)

3E-COMMERCE RISK ANALYSIS: AMAZON
Kelly Hartman (GH-AWS)
Primary business
activities:
Digital distribution
E-commerce
Cloud computing
Consumer electronics
Artificial intelligence
Locations: Worldwide
Major products &
Services:
Amazon Echo
Amazon Fire TV
Amazon Kindle
Amazon Fire
Amazon Fire OS
Amazon.com
Amazon Alexa
Amazon Prime
Prime Videos
App-store
Major competitors: Walmart
Costco Wholesale
Alibaba.com
Alphabet
Stock information: Recent price: 1943.50
52-week high: 2050.50
52-week low: 1307.00
Avg. Vol (mil): 3.91
Market value (mil): 959,866.70
EPS: 23.96
Price/Sales: 3.87
Price/Earnings: 80.59
Price/Book: 18.09
Beta: 1.59
Recent financial
performance:
Key Ratios Company Industry
Net Profit Margin 5.06 5.39

4E-COMMERCE RISK ANALYSIS: AMAZON
(TTM) %
Return on Assets
(TTM) %
7.89 6.70
Return on Equity
(TTM) %
30.06 20.38
Current Ratio 1.10 1.20
Quick Ratio 0.85 0.75
Sales 5 Year
Growth
25.62 -
Debt to Equity 0.91 0.78
Overview of Amazon’s e-commerce activities
Amazon claims to be the most customer-centric organization on the Earth and
believes in four guiding principles that guide them. The company focuses on the obsession of
customers rather than on competitors, they have deep passion for intervening, committing to
excellence and success of operations and finally, thinking about long-term plans. Every stage
is served to the primary consumers or rather stakeholders of the company consisting of
sellers, developers, consumers, creators and many more. In addition to that, the company
provides advertising service too (Dove et al. 2015).
At the initial stage of the company, they used to sell music and videos and then books
at the international stage. Gradually, it started getting acquainted to selling video games,
software, electronics, home needs, apparels and many other items. In 2002, the company
initiated a new section as Amazon Web Services that provides data on internet traffics,
popularity of website and marketing statistics. Consequentially, the limits were expanded by
Elastic Compute Cloud, Simple Storage Service and others. In order to automate the
inventory management, Amazon took over Kiva Systems and Whole Foods Market.

5E-COMMERCE RISK ANALYSIS: AMAZON
The primary revenue source for the company is selling the wide range of services and
products to their customers. The financial body focuses on long-term and sustainable growth
in the free cash flows. Amazon seeks reducing their variable costs per unit and work on
leveraging the fixed costs. The inventory has been turned on quick note due to the business
model and have been generating cash in the operating cycles. They expect expensing on
technological content with increasing time featuring with designers, computer scientists,
engineers of software and hardware as well as employees of merchandise. The stakeholder
management strategy of the company is flexible and issues shares for the purpose of finances,
compensation and many more parameters. The company generates the annual report based on
the currency of US dollar that is significantly affected by changing rates of currency and
consolidated trends (Narula & Jain, 2015).
Need of cyber security in Amazon
Cyber security refers to the safeness of information on the internet and interlinked
connections. The basic concept of cyber security revolves around the CIA triad that
represents confidentiality, integrity and availability. Amazon is operating on the online portal
though a huge social and network connections that contains sensitive information and needs
to be protected. Hence, to protect the information, prevent cyber-attacks, identify threat or
theft, data breaching, as well as aiding risk management, the need of cyber security is
important (Hibshi, Breaux & Broomell, 2015).
Hackers can get access to data with hacking programs run on the system links and can
steal sensitive information as well as money. Therefore, it is important to comply with the
cyber security policies and norms. The principles of cyber security states that every network
must comply with the norms and safety tricks in the cyber world. Amazon is linked to
billions of members and customers through the portal and therefore, have the responsibility of

6E-COMMERCE RISK ANALYSIS: AMAZON
protecting the information and maintain encryption of the credentials (Haucap & Heimeshoff,
2014).
Amazon have already been in the system of data encryption and operates the cyber
security complexes efficiently. The secure sockets layer (SSL) is a system encrypting web
traffic and keep them private between the website and customer. This means only the person
having the key to access the page can read the data else not. This system is supported by log
in data, IP and location tracing. Currently, biometrics and face recognition systems are
developed to support the data violation. The third parties can still intercept the data with user
name and login ID but due to encryption on through SSL, they view gibberish elements (Sun
et al. 2014).
The header information prevents attackers obscuring the details of the website. The
cookies on the searching data are protected and prevents the malware by any third party to
impersonate the concerned customers. The email and DNS protection help in verifying the
email addresses of the operators to be real or fake (Vovchenko et al. 2017). The promotional
messages on the email boxes of users are termed as phishing emails that have successfully
tricked people number of times to fetch the account details. However, the data remains
protected with the systems under Amazon web data encryption.
Identified risks and potential impact
The number of risks for Amazon have been many as detected in their recent annual
report. The following are the list of risk factors identified by the company:
 Competition
 Expansion
 Fluctuations
 International operations

7E-COMMERCE RISK ANALYSIS: AMAZON
 Optimizing fulfilment network
 Seasonality of business
 Unsuccessful in building business relations
 Investments
 Foreign exchange risk
 Loss of key personnel
 Loss of data and security
 System interruptions
 Inventory risk
 Protection of intellectual property
 Evolution of business model
 Evolution of government regulations
 Additional taxes and obligations
 Supplier relationship
 Government contracts
 Product liability claims
 Payment related risks
 Fraudulent
Amongst all the risk factors identified, the ones that have severe impact on the cyber
security of the company are stated in the below table (Amazon.com. 2019):
Document
control
informatio
n
Risk
identifier
Risk
Category
Risk
Description
Impact of
the risks
Risk
response
category
Owner
of risk
Precautionary
recommendations
Owner
of Risk
response
action
Expansion
into new
products,
technologies
, services
and regions
Lowering of
profitability,
technological
challenges,
unwanted
customer
claims
Market
data risks
1. Market
data risk
arises due to
entry into
new region
and access to
new set of
data
1. Fall in
revenue
and losing
of
consumers.
(short term
impact)
2. Losing
Strategic
cyber
security
decisions,
marketing
strategies
Finance
departme
nt,
Marketin
g
departme
nt, Risk
manager,
1. Formation of a
strong risk
management
strategy.
Use of modern risk
management
systems
Strengthening
Marketin
g
departme
nt, IT
departme
nt, R&D
departme
nt

8E-COMMERCE RISK ANALYSIS: AMAZON
2.
Technologic
al resources
utilisation
with
inefficient
knowledge
investors,
and supply
chains due
to falling
capacity to
give
positive
ROI.
(medium
term)
3. Goodwill
risk and
losing of
global
market
position
(long term
loss)
4. Reduced
productivit
y due to
increasing
accidents
and loss of
resources
Engineer
, IT
engineer
s
marketing of
products,
introducing new
and innovative
products with less
competitors 4.
Increasing data
security
Optimize
and Operate
Fulfilment
Network
and Data
centres
Insufficient
fulfilment or
data centre
capacity,
increased
costs,
impairment
charges
Data
managem
ent risk
Data
management
risk can
impact the
overall
productivity
of the
company
and
increases
complexity.
Complexity
increases,
network
inefficiency
, increased
cost
High to
very high
Fulfilme
nt
Network,
IT
Increasing data
optimization
IT,
owner
Loss of data
and Other
security
breaches
Violation of
data security,
exposure of
credentials
into wrong
hands
Cyber
theft risks
1. Cyber-
attack would
cause loss of
ICT data and
designs
which would
attract huge
security
risks
towards the
company
and
customer
data.
2. Cyber-
attacks lead
to loss of
customer
and financial
data of
extreme
business
significance.
Loss of
customer
data and
financial
resources
online lead
to R1
1. Loss of
sensitive
business
data.
2. Loss of
financial
resources.
3.
Unauthoris
ed access to
the
business
strategy
information
of the
company.
4. R1
High Apex
manage
ment and
all the
departme
ntal
heads
1. Tightening of
security.
2. Allocating new
email ids and
passwords to each
employee.
3. Mandating
subordinates to
obtain approval of
superiors to accede
to specific
information.
4. Making it
compulsory for all
employees to
exchange official
information
exclusively on the
formally laid path
of information
sharing.
5. Employees
holding assistant
managers and
beyond should
lock their systems
using a four-layer
password security.
Apex
manage
ment and
all the
departme
ntal
heads
System Slower Network Natural Depends on Immediate Governm Rebooting, strong IT,

9E-COMMERCE RISK ANALYSIS: AMAZON
interruption
and Lack of
redundancy
network
service,
interrupted
systems
risks weather
consequence
s or
inefficient
plugin can
lead to loss
of
networking,
access to
data
interpretatio
n
the number
of times
occurring
ent,
security
personne
l, IT
connection set ups owner
Conclusion
Hence, from the above discussion and analysis, it can be concluded that Amazon had
been and still does take their operational assessments seriously that easily grasps the
problems and ways to resolve them. Apart from being unsecured over internet in many terms,
Amazon maintains their web development and has to work more on overcoming the risks
identified related to cyber security.

10E-COMMERCE RISK ANALYSIS: AMAZON
Reference
Amazon.com. (2019). Annual reports, proxies and shareholder letters | Amazon.com, Inc. -
IR. Retrieved 11 August 2019, from https://ir.aboutamazon.com/annual-reports
Amazon.com. (2019). Retrieved 11 August 2019, from https://ir.aboutamazon.com/static-
files/0f9e36b1-7e1e-4b52-be17-145dc9d8b5ec
Chou, D. C. (2015). Cloud computing: A value creation model. Computer Standards &
Interfaces, 38, 72-77.
Dove, E. S., Joly, Y., Tassé, A. M., in Genomics, P. P. P., Committee, S. P. I. S., Burton, P.,
& Hveem, K. (2015). Genomic cloud computing: legal and ethical points to
consider. European Journal of Human Genetics, 23(10), 1271.
Haucap, J., & Heimeshoff, U. (2014). Google, Facebook, Amazon, eBay: Is the Internet
driving competition or market monopolization? International Economics and
Economic Policy, 11(1-2), 49-61.
Hibshi, H., Breaux, T. D., & Broomell, S. B. (2015, August). Assessment of risk perception
in security requirements composition. In 2015 IEEE 23rd International Requirements
Engineering Conference (RE) (pp. 146-155). IEEE.
Li, W. (2014). Risk assessment of power systems: models, methods, and applications. John
Wiley & Sons.
Narula, S., & Jain, A. (2015, February). Cloud computing security: Amazon web service.
In 2015 Fifth International Conference on Advanced Computing & Communication
Technologies (pp. 501-505). IEEE.

11E-COMMERCE RISK ANALYSIS: AMAZON
Sun, Y., Zhang, J., Xiong, Y., & Zhu, G. (2014). Data security and privacy in cloud
computing. International Journal of Distributed Sensor Networks, 10(7), 190903.
Vovchenko, N. G., Andreeva, A. V., Orobinskiy, A. S., & Filippov, Y. M. (2017).
Competitive advantages of financial transactions on the basis of the blockchain
technology in digital economy. European Research Studies, 20(3B), 193.

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Appendix

13E-COMMERCE RISK ANALYSIS: AMAZON