MBA402: Governance, Ethics, Sustainability - Trading.com Risk Report

This report provides a comprehensive risk assessment of Trading.com, a company offering investment courses and mentoring services. Using the Risk Exposure Calculator, the analysis identifies key risk areas categorized into growth-related risks (pressure for growth, expansion, and employee inexperience), culture-related risks (rewards for entrepreneurial risk-taking, resistance to bad news, and internal competition), and information management risks (transaction complexity, diagnostic performance gaps, and decentralized decision-making). The assessment concludes that Trading.com falls into a caution zone, highlighting the need for proactive risk mitigation strategies to ensure sustainable growth and stability. The report uses examples from the case study to illustrate each risk and provides a score based on the risk exposure calculator.

Running head: GOVERNANCE ETHICS AND SUSTAINABILITY
Governance Ethics and Sustainability
Name of the Student:
Name of the University:
Author’s Note:

1GOVERNANCE ETHICS AND SUSTAINABLITY
Executive Summary
This report discusses about the concept of risk assessment through the use of the case study
of Trading.com. For the analysis of the risks that the company is facing currently the tool of
risk exposure calculator has been used. The report begins by providing an overview of the
company Trading.com. The report next categorizes the diverse risks faced by the company
into three sections namely, risks points due to growth, culture and information. In the section
of risk points due to expansion, the report discusses about the three major risks that the
company is facing, namely, risk due to growth, expansion and inexperience of the employees.
In the section of risk points due to culture, the report discusses about the risks due to rewards
for entrepreneurial risk taking, risks due to executive resistance to bad news and risk due to
internal completion. Finally, for the risk points due to information management, the report
discuses about the risks due to transaction complexity and velocity, gaps in diagnostic
performance and degree of decentralized decision making. The report finally concludes with
a discussion of the results of the risk assessment which shows that the company falls in the
category of the caution zone. This means that the company needs to mitigate the risks that it
is facing currently facing for its steady growth.

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Table of Contents
Introduction................................................................................................................................3
Trading.com...............................................................................................................................3
Trading.com and the risks faced by it........................................................................................4
Risks points due to growth.....................................................................................................4
Risk due to pressure for growth.........................................................................................5
Risk due to pressure for expansion....................................................................................5
Risk due to inexperience of employees..............................................................................6
Pressure points due to culture................................................................................................6
Risks due to rewards for entrepreneurial risk taking.........................................................7
Risks due to executive resistance to bad news...................................................................7
Risks due to level of internal competition..........................................................................8
Pressure points due to information management...................................................................8
Transaction complexity and velocity.................................................................................8
Gaps in diagnostic performance.........................................................................................9
Degree of decentralized decision making..........................................................................9
Results of the assessment...........................................................................................................9
Conclusion................................................................................................................................10
References................................................................................................................................11
Appendix 1...............................................................................................................................13

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Introduction
The success or the failure of an organization depends to a large extent on the manner
in which it is being able to mitigate the adverse effects of the diverse risks that it is faces
(Ward 2016). Furthermore, the managers or the leaders associated with an organization need
to identify the root cause of the risks that they face in the initial stages of its emergence when
it is possible for them to mitigate its adverse effects (Li 2014). In this regard, the concept of
risk assessment becomes very significant which not only enables a particular organization to
identify the risks that it faces but also to devise effective mitigation strategies for the same
(Haimes 2015). The “Risk Exposure Calculator”, in the recent times, has emerged as one of
the most important risk assessment tools which are being used by the various organizations
for the identification of the risks that they face (Simons 1999). This report will discuss the
risks that the company Trading.com is facing currently on the basis of the score of the
company on Risk Exposure Calculator.
Trading.com
The company Trading.com provides offers its customers investment courses and other
kinds of mentoring services. The mantra of the company under discussion here is the fact that
any individual is capable of becoming a successful investor provided they have the right kind
of mind set, support as well as education. It is pertinent to note that following this particular
mind set the company offers investment facilities which it claims can help the customers to
secure a savings and thereby retire at a much earlier age. Furthermore, in the recent times,
following this particular mind set the concerned company has been able to gain a significant
amount of success. However, at the same time, it needs to be mention that this growth is
being seen in a skeptical manner by the diverse employees of the concerned organization. For

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example, the owner of the company Jospe Drake is optimistic about this growth as well as
expansion of business whereas the others are pessimistic about the same.
Trading.com and the risks faced by it
Lebedeva et al. (2016) are of the viewpoint that the various risks faced by an
organization if mitigated as well as utilized in an effective manner can lead to the overall
development and also the growth of the concerned organization. This is important from
perspective of the company under discussion here since the sudden growth as well as success
and its related aspects that the concerned company is facing at the current clearly act as a risk
for the company. The diverse kinds of risks that the company is facing currently can be
broadly categorized under the following three sections-
 Risks points due to growth
 Risks points due to culture and
 Risks points due to information management
Risks points due to growth
The central lacuna of the thought process of the majority of the companies of the
modern times is to attain a higher level of financial and other kinds of growths (Sadgrove
2016). However, at the same time, it needs to be said that there is an element of risk
associated with the process of growth since the companies often face the dilemma whether
they should focus on the concept of quantity or quality for the attainment of process
(Kozubíková et al. 2015). The major risks associated with the process of growth can be
categorized under the following genres-
 Risk due to pressure for growth
 Risk due to pressure for expansion and

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 Risk due to the inexperience of the employees
Risk due to pressure for growth
The company Trading.com is experiencing an unexpected growth currently because
of an increase in the demand of the investment courses and other kinds of services offered by
the company. The owner of the company, Drake, during the initial phases of the company
used to provide aggressive targets to the sales persons. In addition to this, they did not have
any fixed salary rather they would be provided commission on the basis of the number of
courses sold by them. The use of this particular strategy no doubt contributed in a significant
towards the unexpected growth attained by the company however at the same time it is seen
that the employees are taking the help of unethical as well as unfair practices for the
enhancement of the sale of the courses and the other services offered by them to the
customers. This poses a significant amount of risk for the company and the net result of this
particular aspect is that the company has got a score of 3 on this index on the risk exposure
calculator (Appendix 1).
Risk due to pressure for expansion
The unexpected high demand for the services that the company Trading.com is
receiving at the current moment is acting as a challenge for the concerned company because
of the limited nature of resources that they have at their disposal. Furthermore, although the
company currently has around 100 employees yet they are not being able to manage the
workflow in an effective manner and this has forced the company to recruit new candidates
who are often inexperienced and do not have the desired expertise for the concerned job role.
The net result of this particular fact is that the quality of the services offered by the company
is declining and it can adversely affect the prospects of the company in the longer run
(Kowalkowski et al. 2015). Thus, it can be said that the company faces a significant amount

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of risk because of expansion and has a score of 4 on the risk exposure calculator on this index
(Appendix 1).
Risk due to inexperience of employees
Brettel, Chomik and Flatten (2015) are of the viewpoint that the quality of the
services offered by a particular company is directly related to the expertise level and also the
effectiveness with which they are being able to handle the customers. The company
Trading.com faces a significant amount of risk on this score since it is seen that the majority
of the new employees which is hiring currently do not possess the required skills to handle
the customers or cater to their needs in an effective manner. This is likely to affect the quality
of the services offered by the company in an adverse manner. As a matter of fact, most of the
customers are complaining that they receive good treatment from the employees only upto
the point of making the payment and once they have made the payment for the services they
failed to get even a reply from them. This poses a significant amount of risk for the company
since it is adversely affecting the brand image and also the satisfaction level as well as the
loyalty of the customers. Thus, the company has got a score of 2 on risk exposure calculator
on this particular aspect (Appendix 1).
Pressure points due to culture
Recent researches have suggested that the culture which is being followed within a
particular company is directly correlated with the performance level of the employees
(Luthans and Doh 2018). Furthermore, it also enhances the job satisfaction level of the
employees and thereby reduces the rate of attrition of the company (Bromiley et al. 2015).
However, at the same time, it can be said that the use of ineffective organizational culture
within an organization can adversely affect the prospects of the concerned organization (Wu,
Chen and Olson 2014). The risks that the company Trading.com faces on the basis of this
particular aspect can be broadly categorized under these genres-

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 Risks due to rewards for entrepreneurial risk taking
 Risks due to executive resistance to bad news
 Risks due to level of internal competition
Risks due to rewards for entrepreneurial risk taking
The company Trading.com faces a significant amount of risk on the basis of the factor
of entrepreneurial risk taking. In this regard, it needs to be said that the entrepreneur Drake
has created a highly competitive kind of culture within the company wherein the employees
are judged solely on the basis of the number of customers that they are being able to bring
within the fold of the company. This often encourages the employees to take the help of
unethical and inauthentic measures for the purpose of enhancing the sale of the services
offered by the company. In addition to this, the CEO of the company relies on the regional
managers for the information regarding the company however most of the time it is seen that
the regional managers fail to offer concrete information to him. This aspect poses a
significant amount of threat for the company and the company has got a score of 3 on this
index (Appendix 1).
Risks due to executive resistance to bad news
The prospects of an organization depends to a large extent on the manner in which it
only reacts to the bad news but at the same time is being able to mitigate the adverse effects
of the same (Hillson and Murray-Webster 2017). In the particular context of Trading.com it
can be said that the company has a very high level of resistance level to the bad news and
often these bad news are not even conveyed to the higher authorities. For example, it is seen
that the employees are required to give a demonstration of the services to the customers
however the manner in which they should perform the demonstration has been stipulated by
the company. Thus, the nature of these demonstrations is being conveyed to the regional

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managers only in case of success and not in case of failure. The company has got a score of 2
on the risk exposure calculator for this aspect (Appendix 1).
Risks due to level of internal competition
Trading.com has created the kind of culture within its workplace wherein the
employees are being appreciated on the basis of their performance. This has given rise to a
high amount of internal competition within the company and often it is seen that the
employees in order to enhance their performance take the help of unfair means. This is not
only affecting the culture as well as the prospects of the company but also the image of the
company as well (Hopkin 2018). Thus, it can be said that the company faces a significant
amount of risk on the basis of this fact and has a score of 3 on the risk exposure calculator
(Appendix 1).
Pressure points due to information management
The risks that the company Trading.com is facing currently on the basis of this
particular aspect can be broadly categorized under the following sections-
 transaction complexity and velocity
 gaps in diagnostic performance
 degree of decentralized decision making
Transaction complexity and velocity
The company under discussion here in order to attract customers offers them free
seminars regarding the services offered by them. It is pertinent to note that the company has
not stipulated any fixed course of conduct regarding these seminars and the employees often
in order to meet the targets that has been provided to them try to follow the course of action
which is likely to yield the best possible results. However, in the majority of the cases it is
seen that these means adopted by the employees are not fair ones and is adversely affecting

9GOVERNANCE ETHICS AND SUSTAINABLITY
the reputation of the company. Thus, the company faces a significant amount of risk on the
basis of this fact and has a score of 2 in this aspect (Appendix 1).
Gaps in diagnostic performance
The assessment of the performance of the employees should take into effective
consideration not only their individual performances but also the contribution that they have
made towards the enhancement of the performance of the others (Soomro, Shah and Ahmed
2016). However, in the company Trading.com the performance of the employees is judged
solely on the basis of the number of sales they are being able to make in a month and this has
given rise to an aggressive culture within the organization. The risk score of the company
Trading.com on this aspect is 3 (Appendix 1).
Degree of decentralized decision making
The company Trading.com is a decentralized one and it is seen that the employees
have the freedom to deal with the clients and make the sale. The net result of this particular
aspect is the fact that the employees do not follow any specific rules or regulations for the
performance of their job roles and their sole focus is on the enhancement of the number of
sales made by them regardless of the means that they adopt. The score of Trading.com on this
particular index is 2 (Appendix 1).
Results of the assessment
The summing up of all the individual risk scores indicates that the company has got a
risk assessment score of 25 (Appendix 1). This means that the company belongs to the
caution zone. Thus, the company needs to devise diverse kinds of strategies so that they are
being able to mitigate the adverse effects of the risks that they are facing at the current
moment.

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Conclusion
To conclude, the various kinds of risks that a particular organization faces are an
inherent part of their business operations. Furthermore, the prospects of an organization
depend to a great extent on the effectiveness as well as efficiency with which they are being
able to mitigate the adverse effects of the risks that they face. This is important from the
perspective of the organization since it is seen that many times a particular organization
stands to gain significant profits because of the effective mitigation of the risks that they face.
In addition to these, the assessment of the risks that an organization faces becomes important
since it not only provides an idea about the risks that they face but also helps them to devise
effective mitigation strategies as well.

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References
Brettel, M., Chomik, C. and Flatten, T.C., 2015. How organizational culture influences
innovativeness, proactiveness, and risk‐taking: Fostering entrepreneurial orientation in
SMEs. Journal of Small Business Management, 53(4), pp.868-885.
Bromiley, P., McShane, M., Nair, A. and Rustambekov, E., 2015. Enterprise risk
management: Review, critique, and research directions. Long range planning, 48(4), pp.265-
276.
Haimes, Y.Y., 2015. Risk modeling, assessment, and management. John Wiley & Sons.
Hillson, D. and Murray-Webster, R., 2017. Understanding and managing risk attitude.
Routledge.
Hopkin, P., 2018. Fundamentals of risk management: understanding, evaluating and
implementing effective risk management. Kogan Page Publishers.
Kowalkowski, C., Windahl, C., Kindström, D. and Gebauer, H., 2015. What service
transition? Rethinking established assumptions about manufacturers' service-led growth
strategies. Industrial Marketing Management, 45, pp.59-69.
Kozubíková, L., Belás, J., Bilan, Y. and Bartoš, P., 2015. Personal characteristics of
entrepreneurs in the context of perception and management of business risk in the SME
segment. Economics and Sociology.
Lebedeva, T.E., Akhmetshin, E.M., Dzagoyeva, M.R., Kobersy, I.S. and Ikoev, S.K., 2016.
Corporate governance issues and control in conditions of unstable capital risk. International
Journal of Economics and Financial Issues, 6(1S), pp.25-32.

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Li, W., 2014. Risk assessment of power systems: models, methods, and applications. John
Wiley & Sons.
Luthans, F. and Doh, J.P., 2018. International management: Culture, strategy, and behavior.
McGraw-Hill.
Sadgrove, K., 2016. The complete guide to business risk management. Routledge.
Simons, R., 1999. How risky is your company?. Harvard business review, 77, pp.85-95.
Soomro, Z.A., Shah, M.H. and Ahmed, J., 2016. Information security management needs
more holistic approach: A literature review. International Journal of Information
Management, 36(2), pp.215-225.
Ward, J., 2016. Keeping the family business healthy: How to plan for continuing growth,
profitability, and family leadership. Springer.
Wu, D.D., Chen, S.H. and Olson, D.L., 2014. Business intelligence in risk management:
Some recent progresses. Information Sciences, 256, pp.1-7.

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Appendix 1
Assessment of the company Trading.com on the risk exposure calculator