Governance, Ethics, and Sustainability: Trading.com Risk Assessment

This report provides a comprehensive risk assessment of Trading.com, a fictional company experiencing rapid growth, focusing on governance, ethics, and sustainability. The analysis identifies key pressure points stemming from growth, including the pressure for performance, the rate of expansion, and the inexperience of key employees. It also evaluates cultural risks such as rewards for entrepreneurial risk-taking, executive resistance to bad news, and internal competition. Furthermore, the report examines information management challenges, including transaction complexity, gaps in diagnostic performance, and the degree of decentralized decision-making. Utilizing a risk exposure calculator, the report assesses the likelihood and magnitude of these risks, providing insights into the company's strategic, financial, and operational vulnerabilities. The conclusion emphasizes the need for strong corporate strategy implementation and addresses the identified risks, recommending improvements to enhance the company's long-term success and sustainability.

Running Head: GOVERNANCE, ETHICS AND SUSTAINABILITY
GOVERNANCE, ETHICS AND SUSTAINABILITY
Name of the Student
Name of the University
Author Note

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GOVERNANCE, ETHICS AND SUSTAINABILITY
Table of Contents
Introduction......................................................................................................................................3
Assessment of risk factors...............................................................................................................3
Kinds of risk....................................................................................................................................4
A. Strategic................................................................................................................................4
B. Financial...............................................................................................................................5
Risk management for trading.com...................................................................................................6
Threat likelihood..............................................................................................................................6
Likelihood of business threat...........................................................................................................6
Magnitude of the impact of risk.......................................................................................................7
C. Pressure points because of growth........................................................................................7
D. Pressure points because of culture......................................................................................10
E. Pressure points because of information..............................................................................12
Conclusion.....................................................................................................................................14
Reference List and Bibliography...................................................................................................16

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GOVERNANCE, ETHICS AND SUSTAINABILITY
Introduction
This report makes an in-depth criticism of the trading practices of trading.com in regard to their
business activities. One of the major purposes of this report is analysing the risk associated with
the objectives of operations of trading.com and performance of suitable assessment. The case
study provides that trading.com has been able to achieve dramatic success in less time (Kardes et
al. 2013). However, compared to their Rapid success, did not have the necessary workforce or
other capacitance to manage the big client base. Constant challenges like increase in sales or the
independence of the local managers who are not able to handle pressure on motivating
employees, can become very risky affair for the organisation.
However, the case study scenario provides that the organisation should apply proper corporate
strategy and the absence of well defined communication channel for conveyance of information
between them or with the higher management is also a major factor of risk. Hence it can be
stated that there is a communication gap between the organisational layers. Again, because of
severe sales fresher, the quality of service provided to clients are becoming poor, consequently,
the complaints of consumers also approaching more and more. Consumers report in that they
receive respectable behaviour from the consultants until they sign up and pay for the course.
Analysing all these issues of the case study, risk management analysis will be conducted in this
report, based on specific factors of risk, which has been identified in this section.
Assessment of risk factors
As identified by Lam (2014), every business has some risk factors comma overcoming which it
can attain success or undergoes some other consequences as well. Hence, coming to any

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GOVERNANCE, ETHICS AND SUSTAINABILITY
business, only the business events are supposed to be considered. Hence, risk management can
be considered to be a technique of analysing processes, tools or managing such risks.
Hence, it can be depicted that the risk management process will be investigating what would
have went wrong ok, analysing which risk factors should have been dealt with as well as
implement processes for dealing with these risk factors. Masini and Menichetti (2013), analyse
that risk management can help the organisation to identify as well as mitigate the risk that they
have been facing. for evidence, the case scenario of this organisation helps to understand that
although sales of the company profitable, there is high risk since the organisation is lacking
competence. In this current report, analysis has been conducted methodologically, by realising
the risk regarding the feedback provided by the clients about the consultancy service as well as
the management initiatives, which was implemented for client retention. Based on the
assignment, strategies will also be formulated for mitigating the risks that has been identified
here. As highlighted by the risk management procedure guideline, importance of waste
management approaches as well as controls will be recorded in this assignment.
Kinds of risk
The primary list categories which trading.com is liable to face r are compliance, operational,
financial as well as strategic.
A. Strategic
As highlighted by researchers like McNeil, Frey and Embrechts (2015), consultancy services for
investment, have high potential of impacting the pension outcome of large population. It is
essential that market competition should work effectively. Coming to the context of strategic
risk, it is worth mentioning that there is severe competition in the investment market and this is a

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GOVERNANCE, ETHICS AND SUSTAINABILITY
major challenge that this organisation is facing in context of providing consultation to the clients.
However Pritchard and PMP (2014), have identified that the consumers in the investment
market, who uses Consultancy Services are very selective regarding choosing of the course
provider. Hence, it is difficult for the users to make assessment of the market available
information regarding quality of the current investment and then identify whether they should
progress or it is better for them to select a different provider. Hence, it is evident that this
organisation can help in minimization of the driving competition as well as help their clients to
compete this challenge. Now, considering the progress the organisation has made by providing
client solutions, which can be depicted that the strategic risk for the organisation in terms of
providing services to the clients regarding share investment is medium.
B. Financial
The primary financial statements that this organisation can face are non payment by the
consumers or great interest charges over business loans. However, the Research Institute that the
financial risk are low, considering the current profit that has been generated by trading.com
which indicate that sales margin have been height and there have been very rare cases of non
payment by customers with this organisation.
Along with the financial status about former there are other vital risks that this organisation can
face. Vershinina et al. (2016), mentions that the organisations have to maintain sufficient number
of employees, cover as well as safety standard for employees. It is clearly evident in the case
study that the regional managers did not have the sensibility of operating in large corporations
and there was a weak communication channel between the members of various hierarchical
layers. Another big business issue is that the consultants are directly in post with big sales targets
by the higher management without consultation with the intermediate regional managers. This

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GOVERNANCE, ETHICS AND SUSTAINABILITY
shows that the management of the organisation is aggressively competitive. As an outcome, the
organisation will be experiencing growing pressure since forced by the higher management; the
consultants will also not be able to provide quality service to the clients. In this context, it can be
specify that risk factor in this context is very high.
Risk management for trading.com
The following risk assessment metric will be applied for analysing the risk that will be
experienced by trading.com under their current business model.
Risk =Threat likelihood X Magnitude of Impact
Threat likelihood
Threat likelihood Impact
Low Medium High
High (1.0) (10X1.0=10
)
50X1.0=50 (100X1.0=100)
Medium (0.5) (10X1.5)=5 (50X0.5=25) (100X0.5=50)
Low(0.1) 10X0.1=1 50X0.1=5 100X0.1=10
Risk Scale: High (>50 to 100); Medium (>10 to 50); Low (1 to 10)
Likelihood of business threat
Likelihood Definition
Employee
management
When the potential of the risk is high, the impact of such risk on the business will
also be higher.

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GOVERNANCE, ETHICS AND SUSTAINABILITY
risk is high
Strategic
risk is
medium
When medium level of risk is present in the business, the impact can be either
positive or negative. There can also be significant opportunities that the
organisation might experience in terms of future trade
Financial
risk is low
Low financial risk is generally not supposed to create high impact.
Magnitude of the impact of risk
C. Pressure points because of growth
Impact Analysis Score
Impact is high The current operational
scenario of the company is
very high because in the
previous years the company
has received high success in
small amount of time.
However, it is evident that the
capacity of the organisation is
low in terms of managing
their clients. Another major
fact regarding the
organisation is that the
intermediate management is
Hundred

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GOVERNANCE, ETHICS AND SUSTAINABILITY
handled by regional
managers. Lastly, it can be
highlighted reflecting on the
above stated facts that the
perform certain are measured
on the basis of the target that
they have been able to
achieve (Conforti et al.
2015). This actually enhances
the pressure.
Rate of expansion is high It can also be communicated
that the rate of expansion has
been justified but there is
highest because the capacity
of management is very low.
The organisation has
achieved a big client base but
their managerial activities are
poor. The regional managers
do not have a sense of
Corporate management and
there is big communication
gap because managers do not
Hundred

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GOVERNANCE, ETHICS AND SUSTAINABILITY
have access to information
about the Consultants. They
are not able to understand
critical aspects of consultancy
which is left up to the
Consultants ‘discretion
(Ascarza 2018). Hence it can
be concluded that although
the business is currently
profitable, lack of internal
capacitance and poor
management will not be able
to maintain the status for long
period.
Experience of the executive
members
In this case study, it has been
identified that the company
has relatively low capacitance
in terms of hiring as well as
induction. As the company
took the decision of stopping
appointment of new people
having little almost no
experience, they should start
50

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GOVERNANCE, ETHICS AND SUSTAINABILITY
appointing skilled employees
so that the experience sharing
can help in better
performance of the
Consultants.
D. Pressure points because of culture
Rewards for the risk of
entrepreneurship undertaken
It is evident that
entrepreneurship can be
rewarding in the initial stage,
however the struggle cannot
be overcome. After the initial
stage, this organisation has
been able to to achieve
tremendous growth within a
very small time period.
Hence, in order to enhance on
a bigger platform, the
consultants were pressurized
for the by the managers in
order to achieve bigger sales
targets. Hence, it can be
concluded that as a start-up
company, they have taken the
50

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GOVERNANCE, ETHICS AND SUSTAINABILITY
risk large expansion and the
reward that they has gained is
worth appreciating.
Executive resistance is high
which can cause poor
outcome
It should be specified that
managers as well as executive
r operating with others staff
existing in the middle as well
as the lower levels of
Management (Blair and
Marcum 2015). Managers do
not think about consultation,
there are only concerned
about the sales figures. This
is a risky mode of operation.
Successful managers,
according to Chen et al.
(2017), are engaged in
operational activities for
addressing the business
issues.
100
Internal competition is high All the Consultants have high
sales targets but Chen et al.
(2017), mentions that
100

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GOVERNANCE, ETHICS AND SUSTAINABILITY
competition is relatively high
within the organisation,
because it is the consultants
who have to undergo this
pressure and because of this
rigorous pressure, the rate of
employee turnover is also
high.
E. Pressure points because of information
Kind of risk Analysis Score
Complexities and velocity of
transaction
It can be specified that
complexity of the transactions
as well as the velocity in
which the business is
progressing is associated with
high risk because the regional
management is not able to
take the liability of the
business growth thereby
leaving the entire
responsibility on the
shoulders of the senior
50

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GOVERNANCE, ETHICS AND SUSTAINABILITY
management and the
executive members that is the
Consultants. Besides, as
evident in the case study,
there is poor communication
between the higher
management and the
consultants because of which
there might be transactional
risk out of lack of
communication.
Gaps in the Diagnostic
performance is low
It should be specified that
gaps of Diagnostic
performance is low since,
comparing the overall
performance of this company
in contrast to the overall
industrial growth, is quite
high. Significant success has
been achieved within very
less time.
10
The degree of risk in
decentralization of the
Whenever the decision
making process is shared in
50

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GOVERNANCE, ETHICS AND SUSTAINABILITY
decision making is medium
level.
organisation among several
members comma large set of
activities are easily
accomplished. However Chen
et al. (2016), identify that this
can arise problem regarding
coordination as there is no
concrete authority controlling
all the individual actions.
Conclusion
The case study analysis shows that trading.com needs strong corporate strategy implementation.
Three major risks identified for this company are the experience of the regional managers who
you are less competent in managing employees in Big corporate atmosphere and are also
ignorant about the complexities of the Consultancy Services. That is why we are unable to
analyse the quality of the consultants and help with their critical assignments. Secondly the lack
of proper communication channel hampers the sharing of information between the higher
management as well as the executive managers and between the higher management and the
consultants also. Lastly, the higher management imposes big sales target on the Consultants
which hampers their quality of service. In context to these issues, three major kind of risks have
been identified, which are strategic risk, operational risk as well as financial risk. The risk scores
provided in the risk analysis shows the level of risk against each risk factor. While strategy
tourist coming from the external and internal competitive environment is a medium level risk

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GOVERNANCE, ETHICS AND SUSTAINABILITY
factor, the financial risk facing the company is quite low. Nevertheless, operational risk are quite
high because of the fact that the organisation has been able to achieve considerable success and
wide client base in a short time send, they do not have the competence to deal with such a big
client base. Two major suggestions provided in this report in order to minimise risks are the
appointment of proper communication channels between the consultants and the higher
management so that the work methodologies become more rational and the appointment of
highly skilled and more experienced staff compared to pressure and members with almost no or
negligible experience.

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GOVERNANCE, ETHICS AND SUSTAINABILITY
Reference List and Bibliography
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of Marketing Research, 55(1), pp.80-98.
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Burns, P., 2016. Entrepreneurship and small business. Palgrave Macmillan Limited.
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corporate bonds over the business cycle. The Review of Financial Studies, 31(3), pp.852-897.
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Dyllick, T. and Muff, K., 2016. Clarifying the meaning of sustainable business: Introducing a
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GOVERNANCE, ETHICS AND SUSTAINABILITY
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