Risk Assessment of Property Millionaire: Governance, Ethics and Sustainability

This report focuses on the concept of risk assessment. The report will take into consideration the company of Property Millionaire to emphasise on the process of risk assessment. The report will also make use of the risk exposure calculator to calculate the amount of risk faced by the company. The report will provide a rough overview of the amount of risk faced by the company on the aspect of pressure for growth. The report will also take into consideration the risks faced by the company on the various aspects of culture. Lastly, the report will conclude with a discussion of the risk faced by the company on the aspects of information management.

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

1GOVERNANCE, ETHICS AND SUSTAINABILITY
Executive Summary
This report focuses on the concept of risk assessment. The report will take into consideration
the company of Property Millionaire to emphasise on the process of risk assessment. The
report will also make use of the risk exposure calculator to calculate the amount of risk faced
by the company. The report will provide a rough overview of the amount of risk faced by the
company on the aspect of pressure for growth. The report will also take into consideration the
risks faced by the company on the various aspects of culture. Lastly, the report will conclude
with a discussion of the risk faced by the company on the aspects of information
management.

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Table of Contents
1.0 Introduction..........................................................................................................................3
2.0 Pressure points due to growth..............................................................................................3
2.1 Pressure for performance.................................................................................................4
2.2 Pressure for expansion.....................................................................................................4
2.3 Inexperience of key employees........................................................................................5
3.0 Pressure points due to culture..............................................................................................5
3.1 Rewards for entrepreneurial risk taking...........................................................................5
3.2 Executive resistance to bad news.....................................................................................6
3.3 Level of internal competition...........................................................................................6
4.0 Pressure points due to information management.................................................................6
4.1 Transaction complexity and velocity...............................................................................7
4.2 Gaps in diagnostic performance.......................................................................................7
4.3 Degree of decentralized decision making........................................................................7
Conclusion..................................................................................................................................8
References..................................................................................................................................9
Appendix 1...............................................................................................................................10

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1.0 Introduction
According to the Harvard Business Review (2018), risk assessment can be defined as
the process by means of which the various companies or the business organisations measure
the amount of risk faced by their organisation. The amount of qualitative or quantitative risk
faced by any organisation or company can be effectively measured by the use of tool called
“Risk Exposure Calculator”(Harvard Business Review 2018). This particular tool is often
used by companies as well as business organisations to measure the amount of risk faced by
them. It is to be noted that a knowledge of the risks faced by a particular company or
organization can help them to overcome those threats which will lead to the overall growth as
well as the development of the company or the organisation concerned. The company
selected to study the process of risk assessment is Property Millionaires. It is an Australian
company and provides services to the customers in the real estate sector. The company is a
medium sized one and have around 10 employees at their office. However, it is seen that the
business of the company in the recent times have been expanding and the organisation is a
dilemma regarding the kind of action which they need to pursue. The owner of the company,
George wants to expand the company whereas the managers and the regional managers of the
company do not favour the expansion idea of the owner, George.
2.0 Pressure points due to growth
In the opinion of authors like Simchi-Levi, Schmidt and Wei (2014), growth forms
one of the major aspects of all business organisations and almost all the companies consider
the overall growth as well as the development of their organisation to be their primary
motive. However, as stated in the Harvard Business Review (2018), there are various risks
involved with the process of growth as well as expansion. The major risks involved with the
process of growth are listed as follows-

4GOVERNANCE, ETHICS AND SUSTAINABILITY
2.1 Pressure for performance
In the opinion of authors like Van Dooren, Bouckaert and Halligan (2015), the
pressure for performance can become one of the primary sources of risk for any company or
business organisation. In the context of the company Property Millionaires it will be seen that
the owner of the company, George wants to follow the path of growth and therefore the
existing employees will have to improve the level of their performance considerably. It is
also noticed that the company does not have any particular strategy to increase their customer
base. Each employees provides seminars to the customers using his or her intelligence and
they report them back to the regional managers only if they have developed anything
substantial. Therefore, the company will have to take these factors into consideration if it
wants to follow the path of growth and expansion. The score of the company as per the risk
exposure calculator for this particular aspect is 4.
2.2 Pressure for expansion
According to authors like Aebi, Sabato, and Schmid (2012), every company can
embark on the path of growth as well as development, however, it is very difficult to sustain
that process. It is often seen many companies lose their way after initial periods of rapid
growth as well as development and expansion. The owner of the company, George has
decided to follow the path of expansion. Apparently, many customers are liking the services
provided by the company and the company needs to hire more employees in order to cater to
all the needs as well as the requirements of these customers. However, it is seen that the new
candidates recruited by the company are not only inexperienced but inefficient as well.
Therefore, the quality of the services provided by the company is declining. Thus, it can be
said that the pressure for expansion is adversely affecting the company. The score of the
company as per the risk exposure calculator is 5.

5GOVERNANCE, ETHICS AND SUSTAINABILITY
2.3 Inexperience of key employees
In the opinion of the author Picken (2017), the kind of employees working for an
organisation or company determines the success or the failure of the organisation. Most of the
employees of the company Property Millionaires work on a commission basis and have devised
their own means to grab more customers. Moreover, the company in a bid to expand is recruiting
new candidates. However, it is seen that most of these candidates are inexperienced and does not
contribute much to the company. It could affect the prospects of the company in the longer run.
The score of the company on this particular aspect is 4.
3.0 Pressure points due to culture
According to the article in the Harvard Business Review (2018), culture forms one of
the most important aspects of any business organisation or company. It is often seen that the
companies which have an aggressive work culture are more likely to succeed in the longer
run than the ones which do not have such cultures. The pressure points due to culture are as
follows-
3.1 Rewards for entrepreneurial risk taking
In the opinion of the authors like Lazonick and Mazzucato (2013), the success or the
failure of a company or a business organisation depends on amount of run that its
entrepreneurs are willing to take. It is to be noted that the company Property Millionaires
provide free seminars to the customers in bid to sell them their real estate deals. These
seminars are designed by the employees who get salaries on the basis of the number of the
customers they bring to the company. They report about the seminars to the company only if
something substantial comes up. Therefore, it can be said that the employees of the company
are willing to take risk for the overall growth as well as development of the company. The
score of the company for this particular aspect on the risk exposure calculator is 2.

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3.2 Executive resistance to bad news
Authors like Beske and Seuring (2014) are of the opinion that the overall growth as
well as the development of any company or organisation depends on the way they are able to
handle the bad news. It is to be noted that the company George, provides free seminars to the
customers to lure them to take their lucrative deals. These seminars are designed by the
employees in the manner they see fit. They report back about these seminars only if they have
some substantial results. Thus, it is seen that the negative as well as the bad news are not
often conveyed to the regional managers. The score of the company for this aspect on the risk
exposure calculator is 5.
3.3 Level of internal competition
Internal competition forms one of the most important aspect of any organisation or
company and if properly utilised can lead to the overall growth as well as the development of
the company or the organisation concerned. It is to be noted that the company, Property
Millionaires do not provide fixed salary to the employees and they work on the commission
basis. The level of competition within the company is very high and the employees who are
able to bring amount of customers to the company are given more priority than the others.
This sometimes creates negative kind of environment within the company and it is also seen
that the employees to attract more customers use all sorts of unethical as well as immoral
means. The score of the company on this particular aspect is 4 as calculated on the risk
exposure calculator.
4.0 Pressure points due to information management
The article in the Harvard Business Review (2018), states that the effective
management of the information within an organisation or a company is very important for the
overall growth as well as development of the organisation concerned. The article also states

7GOVERNANCE, ETHICS AND SUSTAINABILITY
that there are various risks involved with the process. The risks which are involved in the
process are listed below-
4.1 Transaction complexity and velocity
The primary motive of the company is to provide effective services to the customers
in the real estate sectors. The company in order to attract the attention of the customers
provides free seminars to them, which informs them about the precepts of the real estate
industry. The company therefore, needs to constantly update their database as it is usually
seen that the laws which govern the real estate activities constantly change. However, it is
seen that as the seminars are designed by the employees so they focus on the profitably of the
transaction and not on the relevant regulations. The score of the company on this aspects as
measured by the risk exposure calculator is 3.
4.2 Gaps in diagnostic performance
Effective measurement of the performance of the various employees as well as the
organisation itself is one of the most important functions of the management team (Hofmann
et al. 2014). However, in the company, Property Millionaires it is seen that the various
regional managers are often unaware about the actual performance of the employees as they
do not work on a fixed salary scale but on the incentive scale. Therefore, there is often a gap
in the diagnosis of the performance and this can hamper the prospects of the company in the
longer run. The score of the company for this particular aspect as measured by the risk
exposure calculator is 4.
4.3 Degree of decentralized decision making
In the opinion of authors like Sadgrove (2016), the decision making power should
within an organisation should be with the management team only. It is often seen that if the
decision making power is provided to many people it leads to a gross misuse of the power. In

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the company, Property Millionaire it is seen that there is a management team which is
supposed to make the various decisions related to the seminars. However, most of the time it
is seen that the various employees design the seminars as per their requirements and they
report back the changes to the regional managers only if any substantial result comes out of
it. Therefore, it can be said that the power within the company is decentralised. The score of
the company in this particular aspect is 4.
The above given scores for various aspects when added up will give a overall score of
35, which makes the company fall in the danger zone category. Therefore, the company
needs to come up with effective measures to save itself from the eminent risks which is
facing at the present moment.
Conclusion
Therefore, from the above discussion it becomes clear that the management of risk
forms an important aspect of any company or business organisation. Effective management
of risk is very important as it can lead to the overall growth as well as the development of the
entire company or the business organisation concerned. The risk assessment of the company
Property Millionaires clearly indicates that it fall under the category of the danger zone and
needs to come up with some effective remedial measures immediately in order to save itself
from the threats which it is facing right now.

9GOVERNANCE, ETHICS AND SUSTAINABILITY
References
Aebi, V., Sabato, G. and Schmid, M., 2012. Risk management, corporate governance, and
bank performance in the financial crisis. Journal of Banking & Finance, 36(12), pp.3213-
3226.
Beske, P. and Seuring, S., 2014. Putting sustainability into supply chain management. Supply
Chain Management: an international journal, 19(3), pp.322-331.
Harvard Business Review. 2018. How Risky Is Your Company?. [online] Available at:
https://hbr.org/1999/05/how-risky-is-your-company [Accessed 4 Feb. 2018].
Hofmann, H., Busse, C., Bode, C. and Henke, M., 2014. Sustainability‐related supply chain
risks: conceptualization and management. Business Strategy and the Environment, 23(3),
pp.160-172.
Lazonick, W. and Mazzucato, M., 2013. The risk-reward nexus in the innovation-inequality
relationship: who takes the risks? Who gets the rewards?. Industrial and Corporate
Change, 22(4), pp.1093-1128.
Picken, J.C., 2017. From startup to scalable enterprise: Laying the foundation. Business
Horizons, 60(5), pp.587-595.
Sadgrove, K., 2016. The complete guide to business risk management. Routledge.
Simchi-Levi, D., Schmidt, W. and Wei, Y., 2014. From superstorms to factory fires:
Managing unpredictable supply chain disruptions. Harvard Business Review, 92(1-2), pp.96-
101.
Van Dooren, W., Bouckaert, G. and Halligan, J., 2015. Performance management in the
public sector. Routledge.

10GOVERNANCE, ETHICS AND SUSTAINABILITY
Appendix 1
The risk assessment of the company Property Millionaire on the Risk Exposure
Calculator is provided by the below given figure-