Compliance And Governance Issue

RUNNING HEAD: RISKS AND ETHICAL ISSUES
RISK AND ETHICAL ISSUES
Name of the Student:
Name of the University:
Author’s Note:

RISK AND ETHICAL ISSUES1
Table of Contents
Introduction:....................................................................................................................................2
Risk assessment:..............................................................................................................................2
Ethical issues analysis:....................................................................................................................5
Top three issues:..............................................................................................................................9
Product risk:.................................................................................................................................9
Compliance and governance issue:..............................................................................................9
Financial risk:............................................................................................................................10
Conclusion:....................................................................................................................................10
References:....................................................................................................................................11

RISK AND ETHICAL ISSUES2
Introduction:
While investing in a business organisation or creating a start-up business organisation,
the investors and owners have to face certain risks and ethical issues. These risk drivers must be
prioritised by the entrepreneur of a start-up company and every investor to mitigate the risks.
This report aims to identify risks and ethical issues and analyse them from the start-up business
organisation and investors perspective. Among these identified risks and issues the top three will
be chosen. To mitigate the issues what should be done will be analysed in this report.
For the risk assessment, ‘Faction Collective’, as a start-up company, will be analysed.
This Switzerland based Start-up Company, formed in 2006, is the manufacturer of poles, freeride
skis and skiing related product. Co-founder of this organisation re Tony McWilliam and Alex
Hoye (Faction Skis, 2020). The ski equipment products produced by this company are delivered
in Switzerland and the global market. For the part of the ethical issues, the chosen company is
‘Pistol Lake’. In 2012, this company was established to produce organic cotton (Pistol Lake,
2020). By recycling used water bottles and eucalyptus, this company produces organic cotton for
men, which is perfect performance fabric. Founders of this company were Will Sulinski, James
Sulinski and Andrew Kneisley (Pistol Lake, 2020). Lumens Light was established in 2006. This
company aims to offer modular LED lighting for high bay commercial and industrial building,
which can save at least 50% energy and reduce cost (Lumens.com, 2020).
Risk assessment:
In this part, three risks for the ‘Factory Collective’ will be highlighted, which can affect
investors of Start-up Company or owner, who has developed a start-up company. The

RISK AND ETHICAL ISSUES3
entrepreneur or the investor of this company can be affected by three key risks which are product
risk, financial risk and technological risk.
Entrepreneur perspective
Product risk An entrepreneur can face difficulties in transforming an idea into a market-
ready product. An entrepreneur utilises his idea and transforms it into a
product. This procedure is time-consuming and difficult too (Teberga Pedro
& Oliva 2018, p. 1363-1381). The Factory Collection, as a start-up company,
produces equipment for ski. In this scenario, the entrepreneur of this
company has faced problem to develop an environment-friendly and light-
weight product for all-mountain skiing.
 Flaws in the product can affect the entrepreneur. The defect in the
product design, inability to support growth, the decreasing demand
for the product can affect the business of the Faction Collection.
 Lastly, the initiative of the Faction Collection can be affected by laws
and restriction.
Financial risk  The business of the Faction Collection can be disrupted by several
financial factors which are loss of capital, uncertain income, inflation,
economic recession, higher costs, bankruptcy and changes of interest
rates (Berkhout, Hartog & Praag 2016, p.249-268).
 To develop a new product, collecting the amount of money can be
difficult for an entrepreneur.
Legal risk  Contract risk, human resource risk, regulatory risk and environmental
risk as a part of legal risk may affect the start-up company (ROZEK