Risk Assessment Report for Trading.com: Governance Ethics

This report analyzes the potential risks faced by Trading.com due to its growth, culture, and information management practices. It provides a risk exposure calculator and suggests strategies for risk mitigation.

Running head governance ethics: 1
RISK ASSESSMENT REPORT A CASE STUDY OF TRADING.COM
GOVERNANCE ETHICS.
STUDENT'S NAME
COURSE
PROFESSOR
UNIVERSITY
DATE

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EXECUTIVE SUMMARY
Risk assessment is a very significant aspect for any company that wishes to excel. Risk
assessment refers to the process of analyzing all the potential risks that the business might face
and formulating the strategies to mitigate the risks. When the market is thriving well it is usually
challenging to focus on the potential dangers as everything usually seems to work well for the
company. Managers are advised to be very keen of any potential hazards that may face the
business as a result of recruitment of new employees, an increase in the scale of business
operations and the process of exploring new market opportunities.

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Table of Contents
INTRODUCTION.........................................................................................................................4
GENERAL INFORMATION ABOUT TRADING.COM..........................................................4
RISK ASSESSMENT FOR VARIOUS COMPANY PRACTICES...............................................7
(A) PRESSURE POINTS DUE TO GROWTH......................................................................7
(i) Pressure for performance......................................................................................................7
(ii) Rate of expansion...................................................................................................................7
(iii) Inexperience of key employees..........................................................................................8
(B) PRESSURE POINTS DUE TO CULTURE.........................................................................9
(i) Rewards for entrepreneurial risk-taking...............................................................................9
(ii) Executive resistance to bad news......................................................................................9
(iii) Level of internal competition..........................................................................................10
(C) PRESSURE POINTS DUE TO INFORMATION MANAGEMENT...............................11
(i) Transaction velocity and velocity.......................................................................................11
(ii) Gaps in diagnostic performance......................................................................................12
ii) The degree of decentralized decision making.......................................................................12
RISK EXPOSURE CALCULATOR FOR TRADING.COM.......................................................13
GROWTH..................................................................................................................................13
PRESSURE FOR PERFORMANCE.........................................................................................13
RATE OF EXPANSION...........................................................................................................13

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INEXPERIENCE KEY EMPLOYEES.....................................................................................14
CULTURE.................................................................................................................................14
EXECUTIVE RESISTANCE TO BAD NEWS........................................................................14
LEVEL OF INTERNAL COMPETITION................................................................................14
INFORMATION MANAGEMENT.............................................................................................15
TRANSACTION COMPLEXITY AND VELOCITY..............................................................15
GAPS IN DIAGNOSTIC PERFORMANCE MEASURES......................................................15
DEGREE OF DECENTRALIZED DECISION MAKING.......................................................15
References......................................................................................................................................16

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INTRODUCTION
GENERAL INFORMATION ABOUT TRADING.COM
Trading.com is a company in Australia with offices in Melbourne, Sydney, Brisbane, and
Adelaide which offers share investment courses and continuous mentoring services to the
ordinary citizens in the country. The company believes in the philosophy that anybody can
automatically become a successful share investor if they have the right mindset, support, and
education.
Current company practices that need risk assessment for risk mitigation
The mode of operations of the company requires an urgent risk assessment by the management.
This is because the company is expanding its operations without hiring the new employees
(Albert et al., 2016). The company is also increasing its services without the induction of the
existing employees which shall have adverse effects to the normal operations of the company if a
thorough risk analysis is not done by the management (Samosamo, Marais and Joubert, 2014)
The staff of trading.com has been recommended by the management to be responsible
for the strong financial performance of the enterprise little does the administration know that this
might decline with time due to the insufficient workforce (Kowalkowski et al., 2015). The
increased growth of the company in the provision of services does not have any impact on the
regional managers who are supposed to determine the possible risks that may be associated with
organizational growth and development.
Employees should be very comfortable in the workplace for the proper achievement of set
goals and objectives. They should not be put under pressure to perform because this might lead
to stress which may hinder with their effective performance (Jacobs, Johnson and Hassell, 2018).

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The company has set an aggressive sales target for the consultants to earn a given amount of
commission without involving them in the decision leading to the final sales target (Lovan,
Murray, and Shaffer, 2017). This results in overstraining of the consults but thanks to the
management for setting a basic annual salary for the consultants. Payment on commission posed
a financial pressure to the consultants. The company rewards the highest performing consultants
to motivate them to continue with the same trend (Ristic, Selakovic and Qureshi, 2017). This
results in competition to the point of ruthlessness among the consultants in the process of signing
of the customers for the courses. This might have a negative impact on the organizational
performance in the long run. Lack of corporate strategy for the regional managers is another
issue that needs to be addressed because failure to plan is planning to fail (Hill, 2017). The
company does not have clear communication channels which is a very significant aspect for any
successful organization (Jiang and Men, 2017).
There is no cooperation between the regional managers and the consultants during shortcomings
that may be experienced in the course of performance due to the complexity of the language used
in the consultation process (Čič and Žižek, 2017). This has to be addressed by the management
with immediate effect to avoid escalations that may arise. The regional managers have limited
access to the performance data of the consultants which are not efficient for the desired growth
of the enterprise. Regional managers waste a right amount of time in resolving unanticipated
emergencies rather than focusing on factors that enhance the excellent performance of the
organization.

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For each organization, a performance appraisal is an important aspect of measuring the
employee performance against the set goals and objectives (Rosen et al., 2017). This is usually
effective in the organization when employees submit their monthly performance reports to the
senior management. This enables the administration to establish the performance gaps that need
to be addressed in the present workforce after a thorough review of the report. For trading.com,
the regional managers tend to submit their performance reports to the senior management late, or
they don't offer at all who need to be addressed due to the risks involved.
The senior managers do not work as a team during the development of new courses and this
results to the increased trend in the failure of the new classes due to diversified thinking by
various individuals (Abuzid and Abbas, 2017). Customers are the critical determinants for the
success or failure of the organization hence they should be given the priority by the company.
Their complaints should be addressed with immediate to enhance the excellent image of the
company. Trading.com lose interest in their customers after doing everything to ensure that they
sign for the course and after that their calls are not even responded to which is unethical behavior
by the company.

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RISK ASSESSMENT FOR VARIOUS COMPANY PRACTICES
(A) PRESSURE POINTS DUE TO GROWTH.
(i) Pressure for performance
Trading.com rewarded their best performing consultants which motivated them to work harder.
The consultants were given targets which also enhanced their performance, and this resulted in
ruthless competition among them which leads to a refusal to share some relevant information
amongst them. Organizational growth increases the internal pressure among the employees as
they fear the failure from achieving the set targets since failing to meet the performance
expectations shall risk their job status (Petrou, Demerouti and Schaufeli, 2018). Organizational
growth comes with an increase for the demand for labor to meet the new targets; the organization
might not be in a position to cater for the additional employees as it struggles to reduce the
production cost to maximize the profits. Failure to hire additional employees may result in the
actual risk where the organization may fail to achieve the set objectives.
(ii) Rate of expansion
In the process of development of operations, careful allocation of resources should be done in all
the sectors in the organization to avoid limiting other areas because this may result in quality
risks with service. Trading.com should ensure that it employs new employees after the extension
of its services to provide efficient performance in all the departments within the organization
without straining the few existing workers.

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(iii) Inexperience of key employees
According to Ocasio (2017), there has been an increased need for consultants due to the
expansion of operations by the company hence the company has decided to lower their standards
that have to be met by all the employees during the time of recruitment to hire people with little
to no previous experience in sales. This has a negative impact on the organizational performance
hence the need for risk assessment by the management. This results in increased customer
complaints due to reduced services and also the commitment of too many mistakes resulting in
market risk.

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(B) PRESSURE POINTS DUE TO CULTURE
(i) Rewards for entrepreneurial risk-taking.
The consultants took risks by signing the people for the courses and encouraged them to invest in
the company without fear. They took the chance to gamble with the reputation of the
company.Trading.com decided to go against their set standards for employment by hiring
employees who had little to no experience as salespeople (Anra and Yamin, 2017). This poses
the risk of lack of skilled employees which is a significant aspect if the organization has to
achieve its set goals and objectives. The chances that come with the new technology is dangerous
to the security of the company information where some hackers may intrude and access the most
confidential data hence the company has to have an expert to take care of that.
(ii) Executive resistance to bad news
Feedback regarding the outcome of performance is very vital for the organization to establish the
performance gaps that need to be filled. For Trading.com, negative feedback or bad news about
the performance of the company is usually ignored by the managers due to the weak influence of
their friends.

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(iii) Level of internal competition
Trading.com rewards the best performing employees to reinforce the behavior. This causes
performance pressure among the employees to be paid next time which may lead to stress at the
workplace due to overworking, may lead to low self-esteem among the employees.Further, it
shall result to ruthless competition among the employees which may occur to the risk of
information sharing where employees may feel sharing crucial information regarding
performance with another employee shall make the person better performer hence claim the
reward.

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(C) PRESSURE POINTS DUE TO INFORMATION MANAGEMENT
(i) Transaction velocity and velocity
The complexity of the language used in the consultation process limited performance assessment
by the regional managers hence posing a risk of poor quality performance. Organizational
success resulted in an increased volume and velocity of transactions occurring in an overload in
the information thus less time to scrutinize them to ascertain their alignment with the
organizational policies. Rapid corporate growth also has an impact on the current information
systems used within the organization. This is because corporate growth comes with new changes
especially in technology hence the organization has to update their information systems. New
technology in the organization begins with challenges where employees need to be trained which
is costly for the organization. As a result of increased transaction velocity concerning the
process of signing up individuals for the courses, Trading.com experience the pressure on having
to provide the customers with regular feedback which the failure leads to the risk of market
failure. A good information system has to be devised to enhance clear communication between
the consultants and the clients to foster the right relationship. The consultants should also be
ethical when dealing with the clients especially when it comes to matters to do with responding
to their calls.

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(ii) Gaps in diagnostic performance
Trading.com do not have well- defined communication channels for the efficiency of activities
which poses a risk of role conflict among the employees (Dayan, Heisig and Matos, 2017).
Active communication channels would have been used to query for various issues such as the
submission of performance reports by the regional managers. The use of complex language in
the consultation process hinders the senior managers from understanding the hidden risks that
may be associated with the whole consultation process. The limited access to performance data
by the senior managers exposed the organization to the risk of incompetent services.
ii) The degree of decentralized decision making.
Trading.com made decisions regarding the sales target without consulting the employees'; as a
result, the employees were frustrated and this might have affected their performance adversely
hence decentralized decision-making process is the most effective in the organization for
organizational success. This is because the consultants would not perform have an internal drive
to work to their best due to limited lack of monitoring of the progress of their work by the
concerned department. There should be a good communication system to ensure that the senior
managers are in an excellent position to monitor the employee performance and give the
necessary feedback which may improve on their some unique areas of performance

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RISK EXPOSURE CALCULATOR FOR TRADING.COM
This refers to the criteria that are used to establish the probable risks from the current operations
of the enterprise to come up with risk mitigation strategies (Birmaher et al., 2018). The risk
exposure calculator is divided into three significant internal pressures which are as a result of
organizational growth, organizational culture and the information management system within the
organization. The more successful the organization is, the higher the risk, and the risk increases
with the score.
GROWTH
Organizational growth has resulted in Trading.com to hire new employees for the efficiency of
operations despite their low experience in the sales sector. This risks the performance of the
organization due to poor quality services.
PRESSURE FOR PERFORMANCE
Trading.com rewarded their best performing consultants which motivated them to work harder.
The consultants were given targets which also enhanced their performance, and this resulted in
ruthless competition among them which leads to a refusal to share some relevant information
amongst them. This scores 4.
RATE OF EXPANSION
Due to an increased rate of expansion by trading.com, the company has an urgent need for new
employees hence lowering the performance standards and as a result acquiring employees with
little or no experience at all which poses a performance risk to the company. This scores 5.

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INEXPERIENCE KEY EMPLOYEES
This results in increased customer complaints due to reduced services and also the commitment
of too many mistakes resulting in market risk. This scores 3.
Total score for growth- 12.
CULTURE
Rewards for entrepreneurial risk-taking.
The consultants took risks by signing the people for the courses and encouraged them to invest in
the company without fear. They took the chance to gamble with the reputation of the company.
This scores 4.
EXECUTIVE RESISTANCE TO BAD NEWS.
The regional managers at Trading.com were surrounded by evil men and women who had a bad
influence on them encouraging them that things were better despite the situation poorly been and
this posed a risk of performance since they never wanted any bad news about the company
performance. This scores 5.
LEVEL OF INTERNAL COMPETITION
Trading.com rewarded the best performing consultants which resulted in ruthless competition
among them which posed a risk of lack of sharing of significant information among them which
have a negative impact on the organizational performance. This scores 5
The total score for culture is 14.

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INFORMATION MANAGEMENT
TRANSACTION COMPLEXITY AND VELOCITY
The complexity of the language used in the consultation process limited performance assessment
by the regional managers hence posing a risk of poor quality performance. Organizational
success resulted in an increased volume and velocity of transactions occurring in an overload in
the information, therefore, less time to scrutinize them to ascertain their alignment with the
organizational policies. This scores three because it is not a constant factor.
GAPS IN DIAGNOSTIC PERFORMANCE MEASURES
The regional managers at trading.com did late submissions of the performance reports, or at
times they failed to submit at all. The managers had limited access to performance data. This
posed the performance risk hence scored 5.
DEGREE OF DECENTRALIZED DECISION MAKING
The senior managers solely made the decision especially on matters about the setting of
performance targets which stressed the employees are posing the risk of workplace stress which
hinders performance hence scored 5.
Total score for information management=13.
The total score is 39- This implies the organization is at the danger zone and the
organization must use the levers control, belief systems and diagnostic systems to save the
company from the disaster

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