Risk Assessment Report for Trading.Com

RISK ASSESSMENT REPORT FOR TRADING.COM
I. Identifying the Potential Risks
1. Growth pressure points
The general perception associated with the growth of a business is that the firm is
performing very well. At many instances, the management fails to realize that growth can
also bring some unexpected risks in terms of expenses, quality of performance or loss of
control (Lai, 2014). Though growth is considered to be one of the major aspects of
developing a competitive advantage for an organization, it works only if all the other
parameters like quality of performance, process and employees are maintained, along
with budgeted expenses and reasonable control over the organization’s processes and
operations (Yang et al, 2018). Many organizations are unable to conduct the task of risk
assessment due to lack of resources and capabilities (Brustbauer, 2016). Risks should be
assessed based on certain parameters that exist in all the organizations and there is a need
to keep a watch on those features. Ideally, employees should be encouraged to perform
better but if that creates pressure and fear among them, it leads to unintended risk. The
same happened at Trading.Com. Excessive sales targets are given to sales employees and
they are also ranked based on their target achievement. The pay of the consultants was
purely based on their performance basis which further mounted the pressure on them.
The best performing consultants are rewarded with expensive gifts, luxury holidays and
bonuses. In one way that is motivating for the employees to perform well but the negative
part is this gives rise to ruthless competition. Employees, with average or above average
performance feel demoralized. This further leads to falsifying their true performance
which once again is an indication of risk for an organization.
So according to the risk due to performance pressure will be rated as high as 4.
The rate at which an organization expands, lead to many crucial inferences. Undoubtedly
expansion is an important strategic option for the growth of the business or firm. But that
calls for a lot of information and market research regarding the external and internal
environments of the organization, resources and capabilities, value chain analysis, SWOT
analysis. The strategic position of the organization has to be clearly defined in the
Growth-Share matrix (Harner, 2011). Thereafter, the decision of expansion is made by
the top management. In the case of Trading.Com, the company expanded rapidly
recruiting over one hundred staff with offices in four major Australian cities, within three
years of its inception. Due to a sudden upsurge in the firm’s course sales, the operations
have started expanding at a faster rate than the organization’s hiring ability. There is no
induction and training for the new staff. This calls for serious reconsideration of their so
fast-paced expansion strategies or else this again calls for high risk in the future.
Hence the factor of the rate of expansion will also be rated as high as 4.

As the firm is expanding so fast, there is no focus on hiring and retaining experienced and
qualified employees. The rapidly increasing operations require more consultants and to
fulfill the requirement, the organization is recruiting employees with almost no
experience in sales that lowers the firm’s employment standards. This lack of experience
and quality in the employees is a big red signal for the organization and indicates high
risk (Panigrahi, 2011). The regional managers also lack the capability of strategic
thinking and vision. They are occupied with their own problems and their solutions
without focusing on the organizational requirements.
The factor of inexperienced key employees will also be rated as high as 4.
Hence the total score is 4+4+4=12.
2. Cultural pressure points
Organizational culture plays a crucial role in the process of making decisions and the
formulation of strategies (Schein, 2010). Risk management, assessment and exposure are
also the important aspects of the organizational culture as well as leadership style
(Gorzen-Mitka, 2018). The organizational process works in such a way that the firm is
subjected to many risk management strategies and requirements. Such a culture
encourages entrepreneurial risk-taking as the organization is prepared to manage the risks
associated. With the evolving business landscape, the diversity of the risks associated has
also increased (Ridha and Alnaji, 2015). The major factors contributing to risks are the
external and internal environments of the organizations that include PESTLE forces
(Political, Environmental, Technological, Legal and Economic), increased competition at
the global level, knowledge management and last but not the least the internal
competition among the employees that lead to non-compliance with ethical guidelines
and principle (Berg, 2010). Due to these factors either the organizations equip themselves
with tools helping them to identify, assess or manage risks or the organizations become
risk aversive (Gates et al. 2012).
For an organization to prepare for risk management, it must encourage and reward
entrepreneurial risk-taking. The senior management should be prepared to handle
uncertainties and encourage risk-taking so as to promote innovation and develop a
competitive advantage. In this case, Jospe and his top management team are creative and
are able to take the risk, but there is a lack of coordination among them and they do not
work as a team. Hence their risk taking ability is not rewarded accordingly, instead the
new courses are not doing that well.
Hence rewards for entrepreneurial risk-taking can be rated low as 1 on a scale of one to
five.
Another important factor is the senior management’s resistance to feedback and bad
news. The bad news is important as it gives the probable indications of something wrong
happening or expected to happen. This should be taken as an opportunity to handle any

risk expected and manage the risks associated well in time (Aven, 2016). At
Trading.Com the managers are also not used to hear any kind of bad news that can
provide an opportunity to remove certain loopholes or introduce some corrective
measures. This once again indicates a high probable risk.
So executive resistance to bad news is high and it can be rated as 5 on a scale of one to
five.
Competition among the company staffs is an indispensable part of organization culture.
Employees usually compete against each other for promotions, better salary and bonuses
and recognition (Inaya and Balqiah, 2017). Internal competition motivates employees to
perform better and out-perform their counterparts. This can lead to two probable
outcomes. The employees either compete against each other to innovate that transform
this internal competition into the organization’s competitive advantage, or they take the
help of unethical means to create a short cut way to recognition and success (Huang et al,
2010). This is solely dependent on the nature and intensity of the internal competition.
When such competition creates biases among employees, creates pressure and anxiety,
the employees fail to think positively and creatively and succumb to the mounting
pressure by opting unethical ways. On the other hand the competition is perceived as a
healthy and an option to realize one’ s performance based on the expertise and skill sets,
the result is positive attitude and creativity (Allah and Nakhaie, 2011). All profitable
options are not always ethical. At Trading.Com the consultants and the regional managers
fail to realize this. Consultants are given aggressive sales targets to drive profits and
revenues. Their performance is measured based on their sales target achieved. The best
performing employees are rewarded with costly gifts and bonuses that include luxury
holidays. Such things act like as negative influencers for those are not so high performers
and this inculcates negative emotions.
Hence level of internal competition can be rated as 5 on a scale of one to five.
Hence score for the factor cultural pressure points is 1+5+5=11.
3. Information management pressure points
Managing information in a business firm is a challenging task so as to avoid any kind of
unethical situation and risk that could affect the organization adversely. The entire
business operations and processes depend on how information is managed in an
organization. Globalization and the dynamic environments lead to the tough competition
that demands effective information management that comprises of complex transactions
and their pace (Kuraesin, 2017). The quantity and velocity of the transaction also impose
a bigger challenge as it becomes difficult for the managers to scrutinize each transaction
and calculate the associated risks. In the case of Trading.Com, the company had
expanded manifold in three year period which implies there is a high volume of
transactions with high velocity. The company’s sales increased forcefully. The company
was also advertising free webinars and potential clients are offered a share investment
course for USD 10,000.