Risk Assessment Report of Property Millionaires

This report analyzes the risk exposure of Property Millionaires, a real estate investment seminar company, due to growth, culture, and information management. The report suggests strategies to protect the company's success and continue on the path of success.

RISK ASSESSMENT REPORT OF PROPERTY MILLIONAIRES
1

Introduction
Management of organizations requires integrating the concept of risks, even during
optimism bounds of market growths (Dionne, 2013). During the situation of market growths,
businesses hire people, increases operations scale and search out for new opportunities. At such
times also managers need to assess the potential dangers or risks that are facing the Company.
The continued success of a Company requires it to invest in newer systems and integrate into
aspects of failures. In the current case analysis, a company of Property Millionaires, dealing in
real estate investment seminars is conducted. The philosophy of the Company is to make people
invest in properties such that they can gain substantial returns from them (Koivisto et al. 2009).
George Kirzner established the Company, and currently, the Company is a medium sized
business with over 100 staffs. It has offices in Melbourne, Sydney, Brisbane, and Adelaide. The
Company aims at conducting rapid expansion to hire new staffs such that its business model
continues generating profitability. The Company's risk assessment is undertaken to understand
the level of risks facing the Company.
Risk Assessment Report
Expanding and successful organizations need to look out for circumstances and
management styles that might lead to the creation of possible pressures (Simons, 1999). A
comprehensive risk assessment report details the scores by denoting pressure points, signaling
the Company’s exposure to dangerous levels of risks and then subsequently remedial actions
might be incorporated. Managers can integrate into risk exposure calculator and compare scores
at different levels and across various functions, allowing to assess the Company's unit exposure

to risk as compared to the rest of the organization (Arena, Arnaboldi and Azzone, 2010). The
risk exposure calculator can be used in comparing scores from the past and at current levels such
that the organization's internal risk trajectory can be determined. A risk exposure calculator
provides executives and managers of Property Millionaires for assessing the Company's level of
risks and whether it is in a cautionary phase, safety zone or at danger levels. Determination of the
current company's risk level will allow aligning it with the organization's strategy (Chapman,
2011). The Company to support its random growth have been hiring consultants without much
qualification and receiving complaints from customers regarding them. The Company is skipping
an integral step of the quality-management process by allowing inexperienced consultants with
no prior exposure to sales in holding seminars.
Moreover, case analysis reveals that the senior manager averts providing information
with the regional managers. The negative and bad news is averted at the senior levels, and there
is too much aggression within the Company (Korteweg and Sorensen, 2010). The situation
prevalent within Property Millionaires have been causing inefficiencies in conducting seminars
as their people are undermanaged and overloaded. The risk exposure calculator for Property
Millionaires is done as below;

A. Pressure points due to growth
Internal risks within a corporation can arise due to growth, culture and information
management. As Property Millionaires is in a phase of rapid growth, such pressures can lead to
an increase in the level of risks for the Company (Bui and De Villiers, 2017). Rapid growing
Property Millionaires is attracting some employees and consultants to grow at a rapid rate. The
consultants along with the senior managers and regional managers are given aggressive targets,
setting ambitious profit goals. Consultants are rewarded when they achieve their set targets and
are treated like royals. However, those who fail are not provided anything and consultants work
purely on a commission basis (Lam, 2014). These factors lead to first creating pressure for
performance, then the pressure point being the rate of expansion and finally leading to the
inexperience of key employees.
i) Pressure for performance
Creating pressure for performance might lead to the creation of challenging goals,
averting entrepreneurial creativity, innovation, and superior financial performance. Property
Millionaire has created unintended risk and with consultants fearing that failure to meet their
performance expectation will jeopardize their compensation (Hillson and Murray-Webster,
2017). The consultants might feel the intense pressure to succeed at all costs. As at this point the
aggressive stretch goals were seen set from the top down with no input from subordinates. As
performance-variable pay is compensation for consultants, the score of this point is invariably
high depending upon these factors. (Score: 4) A score of 5 was not given as capital markets were
not present holding high financial expectation from the Company.

ii) Rate of expansion
The rate of expansion in operations such as adding new consultants, conducting new
seminars at the time of business boom is risky (Power, 2009). Rapid expansion without
analyzing resource allocation might lead to overloading and sacrificing in quality. Thus, the
score for this factor can be determined to be 5, which is quite high. (Score: 5)
iii) The inexperience of key employees
Due to the high growth rate within the Company, a high level of inexperience comes up
amongst employees and staff, leading to a third growth pressure point (Merna and Al-Thani,
2011). The hiring of consultants and managers, without checking for their background,
educational qualification or experience have resulted in having consultants without adequate
training or having little understanding of their jobs. Hiring people with inadequacies can result in
committing of small and large mistakes, which finally led to customer dissatisfaction. Managers
to evaluate this pressure point analyses the percentage of jobs or roles which are filled by
newcomers. This score is also supposed to be high as there are some people, especially
consultants with less than 12 months experience, with an increasing number of customer
complaints and consultants as well as managers committing mistakes. The score is likely to be at
five as this risks bring with itself additional risks in an unstructured business like this one. The
consultants could not learn the company values or acceptable standards in behaviors. The
customers primarily complained that the consultants did not receive their calls after being called
to a seminar, seemingly they lost interest, hence posing a higher risk of losing customers to the
Company. Moreover, the way consultants generated the leads were another cause for worry,
leading to this pressure point.

Pressure point due to growth= 4+5+5= 14
B. Pressure points due to culture
A business cannot survive in case there is an absence of entrepreneurial risks (Mikes,
2009). The prevalence of entrepreneurial risk-taking, executive resistance to bad news and levels
of internal competition allows determining this score.
i) Rewards for entrepreneurial risk-taking
The owner as well as regional and senior managers of the Company with high confidence
were emboldened into taking too much of risks. Investing excessively into risks might hamper
the company's reputation for more significant gains. The Company's goal was to undertake great
risks to continue making aggressive profits in future as well. Analyzing this perspective leads to
calculating this score to be at 5.
ii) Executive resistance to bad news
The calculation of risk exposure for this factor can be determined by analyzing the
percentage of business-oriented towards the new services (Segal, 2011). The senior and regional
managers developing resistance to bad news is another aspect of cultural pressure related to
information. They did not take feedback from subordinates and avoided most input, they were
merely driven by the aggressive sales pressure and targeted assigned. As there is no presence of
communication amongst team players, the employees from lower levels are not able to report
regarding the possible risks creeping in. The philosophy of "the boss knows best" can lead to the
creation of such risks immensely. Top-level managers are aware regarding the critical changes in
the competitive environment but not regarding risks faced within teams or at individual

employee levels. Thus, it can be said that this factor has a high score of 5 as the senior and
regional managers were averted to receiving any news.
iii) Level of internal competition
Presence of internal competition is another factor, leading to race amongst consultants
and managers in achieving their targets. Though this stimulated extraordinary efforts, such
internal competition often has side effects, such as a decrease in sharing of information.
Employees and consultants are feeling the internal pressures of competition often gamble with
the company's reputation to increase the company's short term performance. With high levels of
internal competition, it can be said that the pressure point calculated is at score 5.
Pressure point due to culture = 5 + 5 +5 = 15
C. Pressure points due to information management
The final pressure in analyzing risk exposure calculator is related to the flow of
information in the company (Nigro and Abbate, 2011). Success within the marketplace is
determined by way refined products or services are innovated and provided to customers.
Creativity increases the complexity of transactions as lesser people can comprehend risks within
such transactions and control them. In dealing or closing of property, investments require
sophisticated handling of products and services, and there are various hidden parameters in
analyzing them. To calculate pressure in this point, employees and managers need to
comprehend the complexity facing such transactions. Increasing velocity and volume of
transactions due to the hiring of new consultants and managers which led to success have created

an overload of information systems (Reuvid, 2010). The perils facing such a situation are that
managers have limited opportunities in examining approved policies and seminar sessions. To
arrive at the calculation of the score of this pressure point, managers need to comprehend
complexity, velocity, and volume of such information a year ago, and create an internal reporting
system for measurement of critical performance variables, as given below.
i) Transaction complexity and velocity
Increasing transaction complexity was not presented at Property Millionaires. Rather the
organization due to the hiring of more and more consultants faced an increasing velocity of
transactions. There were more and more seminars that needed to be held to arrive at the targeted
sales figures. To arrive at this score, it becomes impertinent to analyze the difficulty faced in
getting the right data at the right time. Gaps in diagnostic performance measures, managers
spend more time in the acquisition of necessary information. The situation in the current
company is such that it is relatively not difficult in the acquisition of information, but rather there
has been an increased number of transactions. Thus, the score for this parameter can be regarded
as 3.
ii) Gaps in diagnostic performance
Information systems providing the right information promptly can be used for arriving at
the score for this domain. As managers at all levels are busy chasing their target levels, the
preparation of data regarding performance remains either missing or late. In absence diagnostic
controls being able to monitor performance effectively, there is the possibility of high risks
arising in the domain. The score rating of risks for this category is 5.
iii) The degree of decentralized decision making

The final degree for information management pressure point is dependent upon
decentralized decision making. As in this case, the company can be seen to be expanding
quickly, and autonomy is given into decision making, the top level regional managers are
engaged in the process of setting targets only. Though such decentralized decision making has
positive outcomes, the negative aspect includes consultants and managers acting without the
sense of the organization's corporate strategy. The absence of proper information channels is
another drawback, as senior managers are not interested in important information shared by
subordinates. This leads to a high score on this point of 5.
Pressure points due to information management = 3 + 5 + 5 = 13
The analysis of the above factors leads to a total risk exposure score of 24 as calculated
below;
Total Score = 14 + 15 + 13 = 24
Conclusion
In the case of dynamic markets, the undertaking of risks might lead to the creation of a
successful strategy. However, detection of unhealthy risks can assist in the prevention of failures.
Moreover, risk exposure calculator can track the pressure points and then control the pressure
points. The organization is seen to be facing high levels of risks which are growing at a fast pace.
Managers and head of the Company need to devise strategies to protect their success and
continue in their path of success.

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