Governance, Ethics and Sustainability - Risk Assessment of Property Millionaires

This assignment discusses the risk assessment of Property Millionaires, an investment seminar company, using a risk assessment calculator. The risks associated with growth, culture and informal management are discussed. The cumulative score of 39 indicates a highly risky situation.

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
Success for any organization is determined as the situation, which generally is associated with
excessive risky situation. New organizations generally are not been able to understand the
pressure and risk associated with success and therefore they face risky situations more than older
organizations. This assignment discussed about a risk assessment of a company ‘Property
Millionaires’. The risk assessment was done based on a risk assessment calculator and the ratings
were provided on the scale of 5. Finally, a cumulating score was assigned to it and depending on
which the risky situation for the organization was determined. The reading of the risk assessment
calculator is attached in the appendix section of the assignment.

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Table of Contents
Introduction..........................................................................................................................4
The case study......................................................................................................................4
Risk assessment of the company.........................................................................................5
Pressure point due to growth...........................................................................................5
Pressure for performance.............................................................................................5
Rate of expansion........................................................................................................5
Inexperience of key employees...................................................................................6
Pressure point due to culture............................................................................................6
Rewarding entrepreneurial risk takers.........................................................................6
Executive resistance to bad news................................................................................7
Level of internal competition.......................................................................................7
Pressure point due to informal management...................................................................7
Transaction complexity and velocity...........................................................................7
Gap in diagnostic performances..................................................................................8
Degree of decentralized decision-making...................................................................8
Conclusion...........................................................................................................................9
References..........................................................................................................................10
Appendix............................................................................................................................12

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Introduction
The best phase for any organization is related to its success, as it brings several
opportunities for the organization and its employees. The employees feel that their future is safe,
as the company profile expands and they start receiving revised remunerations. On the other
hand, the company also started to expand its workforce and implement newer systems to
maintain the new market reputation (Sadgrove 2016). However, such success generally brings
several threats or risks related to it, which has the capability to shatter the company’s structure
and the market reputation. The new and young companies are unable to identify these risky
situations and therefore the rate of such organization being affected to risks is more than the
experienced organizations. The risk generally involved external and internal factors within
which, internal risks hampers the organization adversely (Reason 2016). This assignment is
going to discuss such risky situations for an investment seminar company Property Millionaires,
and different aspects of risk associated with it will be discussed. Further, the total calculated risk
would be provided in the appendix section of the assignment with the help of risk assessment
calculator.
The case study
A successful real estate developer George Kirzner developed the company Property
Millionaire three years ago. The company used to provide detailed seminar and mentoring to
people who wanted to invest in real estates. The company is a mid-scale sales firm having offices
in Sydney, Melbourne, Brisbane and Adelaide. The risk for company started after the company
becomes successful one year ago as the need of expansion marked the urge to employ more

4GOVERNANCE, ETHICS AND SUSTAINABILITY
employees. The primary reason for this was lack of trained employee to handle the excessive
pressure however, George influenced his employees to perform in this crucial and risky situation
and deliver strong financial performance.
Risk assessment of the company
While complying with the state’s law and ethics, or performing financially, there is a
number of risks that an organization faces. These risks are being identified, calculated and rated
using risk assessment process. The tool for such process is known as risk assessment tool, using
which any company can understand its ability to identify the risky situation and find ways to
mitigate those risks (Harvard Business Review 1999). Risk assessment tool assesses internal
pressure using three subsections that are pressure due to growth, culture and improper financial
management. This calculator rates the risk on the scale of 5 where 5 denotes highly risky.
Further, based on the cumulative score of the subsections, the tool provides a total point to the
risks. The total score of 35 to 45 in the risk assessment tool determines that the company is at
highly risky situation (Harvard Business Review 1999).
Pressure point due to growth
Pressure for performance
In the Property Millionaire organization, the employees were at high pressure. CEO of
the company pushed every employee to deliver strong financial performance, but the workforce
was not capable to withstand such pressure, therefore they recruited employees having little to no
experience in sales. On the other hand, the consultants used to set targets that were not
achievable by those new employees (Hall and Wagner 2012). Therefore, in the risk assessment
calculator, the pressure to perform factor deserves 5 point for the given situation of the company.

5GOVERNANCE, ETHICS AND SUSTAINABILITY
Rate of expansion
The Property Millionaire was a mid-sized organization, having its branches in the four
main cities in Australia, until the sudden success it achieves in the market that increases its
market reputation. Therefore, the pressure of expansion came along the success and the company
was forced to employ and train new candidates having less or no experience in sales firm.
Furthermore, the expansion process brings work related pressure as the consultants set up targets
for the employees that were not achievable. Therefore, it is quite evident that the CEO of the
company had utmost pressure to expand his organization, and therefore on risk assessment
calculator, this risk deserves 5 point.
Inexperience of key employees
As the organization faced an unexpected growth in the market, the authorities had
immense pressure to expand their market and therefore, they started employing candidates
having no experience in this crucial field. This led them face a difficult situation, as they had to
provide prior training to those key employees as inexperience of these key employees could have
become the reason for customer dissatisfaction (Winston and Cahill 2012). Therefore, this
experience lack created situation for communication gap between senior management and the
regional manager and therefore they were unable to survive pressure of expansion and perform.
Hence, in the risk assessment calculator the company deserves 5 points for level of inexperience.
Pressure point due to culture
Rewarding entrepreneurial risk takers
The higher authority that is the senior management of the organization used to provide
rewards and incentives to those consultants who were able to prepare more and more seminars

6GOVERNANCE, ETHICS AND SUSTAINABILITY
regarding their real estate properties. They were able to perform depending upon the market
pressure and therefore the system for entrepreneurial reward was working properly in the
Property Millionaire organization (Di Zhang and Swanson 2013). Hence, in the risk assessment
calculator this risk factor deserves 2 points.
Executive resistance to bad news
In the Property Millionaire organization, the senior management team used to prepare
seminars on the real estate projects, which used to be presented to clients for further investment.
However, in the competitive environment, the quality of the seminar used to be low and clients
used to reject those projects. Despite of this, the senior management used to behave separately,
despite being a team. This negative factor increased the frequency of failed seminars and
therefore, resistance to bad news should be rated point 5 in the risk assessment calculator.
Level of internal competition
As the market of the company Property Millionaires was growing, the company hired
consultants, who used to set targets for employees that needed extensive level of competition.
The remuneration of these consultants were depending on the target achieved and the regional
manager rated those employees depending on their target achieved and treated them with special
treatment (Ford and Richardson 2013). Hence, the level of competition was very high in the
organization and the level of it was ruthless. This is the reason it deserves point 4 in the risk
assessment calculator.

7GOVERNANCE, ETHICS AND SUSTAINABILITY
Pressure point due to informal management
Transaction complexity and velocity
As the company started growing extensively, the issue related to complex transactions
and failure of it due to excess velocity of growth increases. The company suddenly started
providing consultation to huge amount of clients, who saw the seminars that were prepared in
pressure situation (Scott and Davis 2015). Therefore, they were not interested in the project and
denied to pay or invest. This leads to transactional complexity and on the risk assessment tool it
was rated 4.
Gap in diagnostic performances
In the given company situation, the gap exists in the senior management of the company
and the regional managers. These authorities were not able to view the employee’s details and
their performance and hence, were not able to take necessary steps to improve their
shortcomings. Therefore, on the risk assessment calculator, this risk should be given 4 points.
Degree of decentralized decision-making
Decision-making is one of the crucial aspect of any organization. The employees did not
had their own decision and had to work based on their higher authorities decision. Furthermore,
the senior management, regional managers all were unaware of the employee performances and
judged them based on the number of clients they faced (Ford and Richardson 2013). The senior
management were not able to attract clients after their expansion, as they were not focused to the
aspects in which they were experts. Therefore, this aspect should be marked as score 5 in the risk
assessment calculator.

8GOVERNANCE, ETHICS AND SUSTAINABILITY
Finally, after assessing all the risks in the risk assessment calculator that is the pressure to
growth, culture and informal management, the cumulative score for the Property Millionaires
Company becomes 39. This score falls in the range of highly risk zone in the risk assessment tool
and according to it, the company should strengthen its risk management aspects and defense
strategies to withstand the forthcoming risks. This can be achieved by implementing risk
identification tools, and employing experienced individual in the high authority positions
(Harvard Business Review 1999). The risk assessment calculator reading is attached in the
appendix section of the assignment.
Conclusion
Success and risk goes hand in hand for any successful organization. Laid back attitude of
employees, inexperience to detect risk and inability to withstand the excessive pressure coming
with success can push any organization in highly risky situation. This assignment discussed
about a company named Property Millionaires and discussed the situation of risk that came along
sudden success. The risk faced by the company was related to culture, pressure of performance
and informal management of company resources. These risks were calculated for the
organization using risk assessment calculator and scores were allotted to its three sections and
subsections on the scale of 5. Further, a cumulative result was obtained and according to the
range of it, the risk for the company was calculated.

9GOVERNANCE, ETHICS AND SUSTAINABILITY
References
Di Zhang, D. and Swanson, L.A., 2013. Social entrepreneurship in nonprofit organizations: An
empirical investigation of the synergy between social and business objectives. Journal of
Nonprofit & Public Sector Marketing, 25(1), pp.105-125.
Ford, R.C. and Richardson, W.D., 2013. Ethical decision making: A review of the empirical
literature. In Citation classics from the Journal of Business Ethics (pp. 19-44). Springer,
Dordrecht.
Hall, J. and Wagner, M., 2012. Integrating sustainability into firms' processes: performance
effects and the moderating role of business models and innovation. Business Strategy and the
Environment, 21(3), pp.183-196.
Harvard Business Review 1999. How Risky Is Your Company?. [online] Harvard Business
Review. Available at: https://hbr.org/1999/05/how-risky-is-your-company [Accessed 3 Feb,
2018].
Reason, J., 2016. Managing the risks of organizational accidents, 1st Edn, pp. 123-145,
Routledge.https://books.google.co.in/books?
hl=en&lr=&id=UVCFCwAAQBAJ&oi=fnd&pg=PP1&dq=why+sucess+is+always+associated+
with+rsks+for+organizations&ots=3aYbRXyzKn&sig=DQ3UmJ7XZbwjyTSVDDvVBnxQu6E
#v=onepage&q=why%20sucess%20is%20always%20associated%20with%20rsks%20for
%20organizations&f=false

10GOVERNANCE, ETHICS AND SUSTAINABILITY
Sadgrove, K., 2016. The complete guide to business risk management, 3rd Edn, pp. 245-267,
Routledge. https://books.google.co.in/books?
hl=en&lr=&id=jfiqCwAAQBAJ&oi=fnd&pg=PP1&dq=what+are+the+risk+factors+for+a+grwi
g+company&ots=HWFSAcFaKe&sig=gMkZn6QzYxAoCrsFfODaeGeRRf8#v=onepage&q&f=
false
Scott, W.R. and Davis, G.F., 2015. Organizations and organizing: Rational, natural and open
systems perspectives, 1st Edn, pp. 123-156, Routledge. https://books.google.co.in/books?
hl=en&lr=&id=aNRRCgAAQBAJ&oi=fnd&pg=PP1&dq=pressure+point+due+to+informal+ma
nagement+in+organization&ots=nHAf0_yU-x&sig=mWIoXZeLjIXl_vjxHNL5jI-
pV0g#v=onepage&q&f=false
Winston, W. and Cahill, D.J., 2012. Internal marketing: Your company's next stage of growth, 1st
Edn, pp. 245-289, Routledge.https://books.google.co.in/books?
hl=en&lr=&id=TcRwWkJN0JEC&oi=fnd&pg=PP2&dq=pressure+faced+by+a+company+due+t
o+growth&ots=WHVCun-
7U6&sig=ZLiAFXplpVfrdU62VIzJ1pZQ9rg#v=onepage&q=pressure%20faced%20by%20a
%20company%20due%20to%20growth&f=false

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Appendix
Risk assessment tool calculator reading for property
Millionaires Company