Risk Assessment Report: Trading.Com Case

This report analyzes the level of risks because of pressure for the performance growth, cultural improvements, and information management practices in the organization of Trading.Com. It provides future directions to the CEO and senior management for having good control over the risk exposure in order to reduce the excessive risks/threats for the company.

Governance, Ethics, and Sustainability 1
Risk Assessment Report: Trading.Com Case

Governance, Ethics, and Sustainability 2
Contents
Introduction.................................................................................................................................................3
Main Discussions........................................................................................................................................4
A. Pressure points due to growth................................................................................................................5
i) Pressure for performance.....................................................................................................................5
ii) Rate of expansion................................................................................................................................5
iii) Inexperience of the key employees....................................................................................................6
B. Pressure points due to culture................................................................................................................7
i) Rewards for entrepreneurial risk-taking...........................................................................................7
ii) Executive resistance to bad news.....................................................................................................8
iii) Level of internal competition.......................................................................................................8
C. Pressure points due to information management.....................................................................................9
i. Transaction complexity and velocity.............................................................................................10
ii. Gaps in diagnostic performance.....................................................................................................10
iii. The degree of decentralized decision-making............................................................................11
Conclusion.................................................................................................................................................13
References.................................................................................................................................................14

Governance, Ethics, and Sustainability 3
Introduction
The main purpose of risk assessment process is to ensure good corporate governance practices,
ethical code of practices, internal control system, and decentralizeddecision-making for the long-
term sustainability of businesses for Trading.Com Company. In the sequence, the risk
assessment report is prepared for the firm by using the Risk Exposure Calculator for addressing
the pressure points due to the growth, culture, and information management. The risk assessment
procedure will analyze the level of risks because of pressure for the performance growth, cultural
improvements, and information management practices in the organization of Trading.Com(Rael,
2017). The risk assessment report will provide the future directions to the CEO and senior
management for having good control over the risk exposure in order to reduce the excessive
risks/threats for the company.

Governance, Ethics, and Sustainability 4
Main Discussions
The Risk Exposure Calculator is used to calculate the level of risks created from the pressure
points due to the information technology, culture, and growth. This is following as for
Trading.Com:-
Growth
+ + =
Culture
+ + =
Information Management
+ + + + =
Pressure for
Performance
Score - 4/5
Rate of Expansion
Score - 4/5
The inexperience
of key employees
Score – 4/5
Total
Score1
2/15
Rewards for
entrepreneurial
risk-taking
Score – 3/5
Executive resistance
to bad news
4/5
level of internal
competition
5/5
Total
Score1
2/15
Transaction
complexity and
velocity
Score- 4/5
Gaps in diagnostic
performance
Score- 4/5
The degree of
decentralized
decision-making
5/5
Total
Score
13/15
Total Score = 37/45

Governance, Ethics, and Sustainability 5
A. Pressure points due to growth
In the competitive business environment, Trading.Com is intended to operate the fast-growing
businesses for increasing its market share, sales volumes, and profitability by acquiring a large
number of the customers for the investment consulting solutions. The senior management attracts
the interests of the regional managers and consultants for the strategic initiatives and efforts in
order to determine the business growth of the company in the market. The management sets
goals and strategies that emphasize the growth of the company.
i)Pressure for performance
This is moderate as the growth perspective can lead to the pressures on the regional managers
and consultants for the high performance and growth efforts to achieve the more performance
targets. The pressure for the high performances can put high workloads and job stress with the
extra performance tasks and added responsibilities for them. In pursuing the pressure for growth,
the quality of performance could be affected while providing an effective service investment
consulting solution to the clients. It can put pressure on them for achieving the challenging goals
and tough targets. Sometimes the subordinates, like the consultants may fear that the pressure for
the high performance efforts may affect the performance expectations of the clients, like poor
credit ratings, negative feedbacks or not quality service delivery (Reuvid, 2014). The consultants
may also fear that the low-performance outcomes or unexpected performance level can decrease
their recognition, compensation, and credibility with the management team.
ii) Rate of expansion
This is another growth factor for creating pressure on the employees for the extra efforts with
more tasks, challenging goals, and more targets (increased volumes and more customer
acquisition). The CEO and senior management of Trading.Com are continuing for expanding the

Governance, Ethics, and Sustainability 6
business operation that may put pressure for increasing the area of operation. The speed of the
expansion can encourage for adding new product lines or services, more distribution channels,
and the hiring new employees. The rapid business expansion may also cause for the requirements
of resources, more funding for investment, and more spaces for establishing new offices as well
as the hiring of new regional managers and consultants (inexperienced). The rapid expansion will
create the high workload and tension for managing the extra tasks (Simmons, 2017).
iii) Inexperience of the key employees
Another growth-related pressure comes from the inexperienced employees or staffs (like new
regional managers and consultants). In the efforts for the expansion of business for Trading.Com,
the senior management is hiring new employees that may lack the adequate skills, knowledge,
and experience related to their job tasks. These employees are not well aware of their job
responsibilities and not expertise in the job tasks. So, such employees cannot find them capable
to deliver the effective investment consulting solution to new clients because of the lack of
understanding of their tasks and duties in the company. The newcomer staffs can take lots of
time in performing their job tasks in an effective manner. The ineffective service solution from
the new employees can spoil the reputation of the company(International Finance Corporation:
World Bank Group, 2017).
Strategies to Mitigate risks-
In order to mitigate or reduce the level of risks from the growth pressure, the company can hire
the experienced employees through their skills aptitude test and checking their experience
certificate, and educational qualification certificate. The senior management should organize the
training and skills development programs for enhancing the skills, knowledge, and job-related
experiences. The company can prefer to recruit mostly the skilled and experienced employees.

Governance, Ethics, and Sustainability 7
Additionally, the company is needed to make preplanning for the resources (physical, human,
financial, informational), distribution channels, and new product lines while going for the
operational expansion. There should be an effective internal control system, like an internal
auditing procedure for the risk management within the organization. The risk control system
should be interacting and designed to stimulate the learning of the employees in the organization
(Vanem, 2012).
B. Pressure points due to culture
The risk exposure calculator exposes the pressure points due to the cultural aspects or
circumstances that lead to the increased risk level. The extent of risk due to the cultural point of
view is moderate. The company may face pressures due to the organizational culture, like
support for the learning workplace environment, high internal competition for performance
incentives, and encouraging the entrepreneurial capabilities among the organizational individuals
(like the regional managers) that may create risks for the company.
i) Rewards for entrepreneurial risk-taking
Awarding for the entrepreneurial-risk taking capability is a positive effort or right thinking
because it can increase the confidence level, morale, and self-esteem among the employees, but
also may create the feeling of the fear of failure in their minds. In the efforts of the creative ideas
or innovation solution in their work performances, the regional managers or consultants in the
company can lose the potential clients. The entrepreneurial feeling can lead to high-risk
exposure, like unsuccessful deals, increased frequency in the failing in the innovative service
solution or bad ideas (OECD, 2014).

Governance, Ethics, and Sustainability 8
ii) Executive resistance to bad news
At Trading.Com, the regional managers not understand their duties and tasks responsibly and
mostly causing for the resistance to the bad news, even they not listen to the consultants properly
and tend to leave for letting their work independently without much interference. The executives,
like consultants running the successful ventures, develop a resistance to the bad news. They
desire that the people surrounding them appreciate their ideas, praise their efforts, and pride their
business success as these are not likely to listen to the news of the rumor, confused views about
their performances, obstacles, or risks from their peers (regional managers) or customers (Aven,
2015).
iii) Level of internal competition
There is a highly competitive environment at Trading.Com from the point of ruthlessness as the
consultants compete with each other for achieving bonuses, performance awards, and luxury
gifts. In achieving huge bonuses, the expensive gifts or luxury holiday packages, the consultants
can make mistakes in their jobs, like only attending the clients and providing consulting solution
and after their enrolment, not focusing on their queries or feedbacks as well as not concentrating
on maintaining good customer relationship. The financial incentives, like bonuses, gifts, and paid
leaves may creative jealousy and conflicts among them toward each other. The increased
competition may also cause for the feeling workloads by consultants, gambling with the business
assets, the financial loss or reputational risk for the company, consultancy inefficiencies, and
undermanaged works (Sadgrove, 2016). Additionally, the consultants can compete with the
peers, like regional managers for the promotions and rewards that can result in the unintentional
side effects, like decreased information sharing (e.g. not sharing the actual performance reports
with the regional managers).

Governance, Ethics, and Sustainability 9
Ways to mitigate risks-
To mitigate the risks from the cultural factors, it is necessary for the management to make
appropriate changes in the cultural environment, like facilitating the learning and collaborative
culture, providing technological training, and allowing the performance-based management
rewards. The sales performance of the consultants should be based on their performance merits,
like the customer retention, good relationships with the customers, financial profits for the
company, and positive customer feedback. Along with this, the regional managers or consultants
can also focus on the poor financial outcomes or negative customer feedbacks for making their
performances better. The senior management can allow the business models of innovation for
improving the creativity and entrepreneurial capabilities of the employees(Anderson and
Associates, 2015). The company could also have an effective information system management
for reporting the actual performances reports to the senior management by submitting the reports
on time for conducting the reviews on their performances.
C. Pressure points due to information management
From the risk exposure calculator, it is identified that the pressure or extent of risk due to the
information management system performance is high for Trading.Com because of the inadequate
management for the information flow and the lack of the standardized information governance
practices that may cause for the information management problems. The company faces the
Information management problems and complexities, like the lack of the consistent information
flow, not well-defined information channels, nor reporting the senior management,the lack of
adequate informational infrastructure, communication gap, and the ineffective information
statutory environment. Due to the informational management pressure, the company encounters

Governance, Ethics, and Sustainability 10
risks in strategic, financial, regulatory, operational, and reputational
implications(Abrahamsenand Aven, 2012).
i. Transaction complexity and velocity
The company faces complexities in the frequent transactions and velocity because of the highly
leveraged derivative financial services, the lack of the standardized Information system, not
effective information and communication tools, limited access to the performance data, and
misalignment between the information management system and business processes that can
cause for the delays in the investment consulting solution, decreased value for the underlying
assets, complexity of the customer service transactions, low operational control and mismatch
between the IT requirements and workforce talents (Trading.Com, 2017). The complexities of
the IT environment, rigid information management systems, poor data access, and incompetent
service staffs are such problems that the firm current faces in managing the speed or frequent
transactions.
ii. Gaps in diagnostic performance
The success can cause for the overloaded informational system because of the increased volumes
and rapid velocity of the transactions as well as fewer opportunities for the regional managers to
check the accuracy of all transactions. There are also problems found in theperformances of the
regional managers and consultants at Trading.Com because of the inefficient information
governance system. The senior management couldn’t get the regional managers’ sales
performances reports for the client investment consulting solutions because of either not
submitting the monthly sales reports on a regular basis or often delays in the reports that create
gaps in diagnostic performance. Sometimes, the consultants don’t understand the consultation
process properly, not listen to the client properly because of the lack of communication skills as

Governance, Ethics, and Sustainability 11
well as the inexperienced employees (Hansson, 2018). The CEO and senior management also
have to face the poor client feedbacks and their dissatisfaction on the consulting service solution.
The regional managers not communicate with the consultants and tend to leave them alone for
working independently.
iii. The degree of decentralized decision-making
For Trrading.Com Company, the extent of decentralized decisions is lowbecause of the poor
communication setting among the senior management, regional managers, and consultants that
can cause for the ineffective decisions and delays in the decisions taken by the regional
managers. In an effort of expanding the business operations of the company, the regional
managers are given autonomy to take decisions independently, some decisions could be taken in
the emergencies that may not be beneficial for the company and can cause for the reputational
risks or financial loss (The World Bank Group, 2018). Because of the lack of the well-identified
informational channels and communication medium, the regional managers understand it
difficult to make decisions, as a result, the quality, accuracy, and quick responses to the decisions
may beaffected.
Recommendations to mitigate risks
In order to mitigate the high level of risks caused due to the ineffective information management
governance, it is necessary for the CEO (Joseph) and senior management to facilitate the well-
identified communication platform and informational channels by using the information and
communication technologies (like, e-commerce, EDI, intranet, extranet, social media, company
site, visual communication portals, and others) for improving the communication process,
information sharing, and data access (Aven, 2013).

Governance, Ethics, and Sustainability 12
The knowledge management tools, like big data analytics, Internet of Thing (IoT), artificial
intelligence, simulation tools, groupware system& KM 2.0 solution, OLAP, Decision Support
system, and document management system could also be used at higher level for sharing
information, supporting the decentralized decisions, and improving the knowledge management
system in the organization. The KM tools will support the technical knowledge, design know-
how, and information governance for increasing the knowledge and technical competence within
the organization through the collaboration and sharing of information between them(Serio,
Oliveira, and Schuch, 2011). The senior management should also develop a standardized IT
infrastructure for giving the technological training to the consultants for enabling them to
understand the IT landscape and sophisticated use of the IT tools. There should also be an IT
security system for securing the private information, secrets, files, and documents from the
external threats (hackers, malware, IT frauds, and spams).

Governance, Ethics, and Sustainability 13
Conclusion
Conclusively, it is identified that the extent of the risk exposure for the Trading.Com Company is
moderate or medium as it encounters different types of risks that may threaten the corporate
governance structure and operational procedures, financial position, market capitalization,
sustainability of the businesses, and investment operations of the company. The company can
ensure the sustainable business operations in the highly competitive environment by assessing
the various types of risks levels and managing controls on the risks.
From the risk assessment report, it is identified that the company faces the pressure points
because of the culture, growth, and information technology. The risk exposure calculator gauges
the level of pressure due to the growth perspective (inexperienced employees, expansion rate,
and performance pressure), culture perspective (the internal competition, executives resistance to
bad news, and performance reward for the innovative performance and entrepreneurial-risk
taking), and information management pressure point (complexities of business processes,
communication gaps, decentralized decisions, and the gaps in diagnosis of information). This
assessment also suggested the ways or measures to mitigate or reduce the level of the identified
risks.

Governance, Ethics, and Sustainability 14
References
Texts/Books
Rael, R. (2017)Smart Risk Management: A Guide to Identifying and Calibrating Business Risks.
USA: John Wiley& Sons.
Reuvid, J. (2014) Managing Business Risk: A Practical Guide to Protecting Your Business.
Australia: Kogan Page Publishers.
Sadgrove, K. (2016)The Complete Guide to Business Risk Management. UK: Routledge.
Websites
Anderson, R. and Associates (2015) Corporate Governance and Risk Management.[Online].
Available at: https://www.oecd.org/corporate/ca/corporategovernanceprinciples/42670210.pdf.
(Accessed: 24 September 2018).
International Finance Corporation: World Bank Group (2017) The Governance of Risk
Management. [Online]. Available at:
https://www.ifc.org/wps/wcm/connect/9b0e0a804681342d8db0bd9916182e35/Session+5+-
+Governance+of+Risk+Management.pdf?MOD=AJPERES. (Accessed: 24 September 2018).
Kacaba, R. and Johnston, B.D. (2015) Information Technology Governance.[Online]. Available
at: https://www.airdberlis.com/docs/default-source/articles/information-technology-
governance.pdf?sfvrsn=2. (Accessed: 24 September 2018).
OECD (2014) Risk Management and Corporate Governance.[Online]. Available at:
http://www.oecd.org/daf/ca/risk-management-corporate-governance.pdf. (Accessed: 24
September 2018).
Simmons, R. (2017) How Risky is Your Company. [Online]. Available at:
https://hbr.org/1999/05/how-risky-is-your-company. (Accessed: 24 September 2018).

Governance, Ethics, and Sustainability 15
The World Bank Group (2018) Risk Taking: A Corporate Governance Perspective. [Online].
Available at: https://www.ifc.org/wps/wcm/connect/9ff11a804c40464698dddaf12db12449/
RiskGovJuly2012.pdf?MOD=AJPERES. (Accessed: 24 September 2018).
Cases
Trading.Com (2017) Case Study: Governance, Ethics, and Sustainability. [Online]. Available at:
https://mail.google.com/mail/u/0/h/1suwec719mj6d/?
view=att&th=165ff6378b304888&attid=0.1&disp=attd&realattid=f_jmbjn5pn0&safe=1&zw.
(Accessed: 24 September 2018).
Journal Articles
Abrahamsen, E. and Aven, T. (2012). ‘Why risk acceptance criteria need to be defined by the
authorities and not the industry’Reliability Engineering and System Safety, Vol.105, pp. 47-50.
Aven, T. (2015)‘Risk Assessment and Risk Management: Review of Recent Advances on Their
Foundation’, European Journal of Operational Research, pp. 1-13.
Aven, T. (2013).‘On how to deal with deep uncertainties in a risk assessment and management
context’Risk Analysis, Vol. 33 (12), pp. 2082-2091.
Hansson, O.S. (2018) ‘How to Perform an Ethical Risk Analysis’ International Journal of Risk
Analysis. pp. 1820-1829.
Journal Disaster Risk Science, 6(6), 8–20
Journal Disaster Risk Science, 6(6), 8–20
Journal Disaster Risk Science, 6(6), 8–20
Renn, O. (2015). Stakeholder and public involvement in risk governance. International
Renn, O. (2015). Stakeholder and public involvement in risk governance. International
Renn, O. (2015). Stakeholder and public involvement in risk governance. International
Serio, D.C.L., Oliveira, D.H.L. and Schuch, S.M.L. (2011) ‘Organizational Risk Management-A
Case Study in Companies that have won the Brazilian Quatity Award Prize’ Journal of
Technology Management & Innovation.Vol. 6(2).

Governance, Ethics, and Sustainability 16
Vanem, E. (2012). ‘Ethics and Fundamental Principles of Risk Assessment Criteria’ Safety
Science, Vol. 50, pp. 958-67.