ESW AR - MBA402 Assessment 2: Risk Assessment of Property Millionaires

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ESWAR - MBA402 ASSESSMENT 2

Contents
Introduction...........................................................................................................................................3
Risk exposure calculator........................................................................................................................4
A. Pressure points due to growth........................................................................................................5
1). Pressure for performance..............................................................................................................5
2). Rate of expansion.........................................................................................................................5
3). The inexperience of key employees.............................................................................................6
B: Pressure points due to culture...........................................................................................................7
1). rewards for entrepreneurial risk-taking.........................................................................................7
2). Executive Resistance to Bad News...............................................................................................7
3). level of internal competition.........................................................................................................8
C). Pressure points due to information management.............................................................................9
1) Transaction complexity and velocity............................................................................................9
2). gaps in diagnostic performance....................................................................................................9
3). Degree of decentralized decision making...................................................................................10
Conclusion...........................................................................................................................................11
References...........................................................................................................................................12

Introduction
The competitiveness and versatility of business environment have made risk identification
and assessment an integral part of corporate culture and strategy. Risks are prevalent in every
phase of a company such as business growth and expansion, hiring new people or
implementing a new strategy and so on. This report aims at conducting a risk assessment of a
fictional company named Property Millionaires. Property Millionaires is an Australian
medium-sized enterprise engaged in offering real estate investment seminars as well as
mentoring services to ordinary people. The company has been expanding with a more rapid
rate than its capacity of new staff hiring and induction. A risk assessment report will develop
using a risk exposure calculator that measures the likelihood of risk occurrence.

Risk exposure calculator
This tool involves the identification and representation of different pressure points prevalent
in every organization that encourages risks in the future. The pressure amount varies
according to the management style and situations dealing with by a company. Three pressure
types constitute the risk exposure calculator named pressures due to growth, information
management, and culture. Analysis of pressure points of Property Millionaires is conducted
as below:
Growth
Pressure of
performance
Rate of expansion Inexperienced
employees
Total risk exposure
3 out of 5 4 out of 5 4 out of 5 11
Culture
The reward for
entrepreneurial risk-
taking
Executive resistance
to bad news
Level of internal
competition
2 out of 5 3 out of 5 4 out of 5 9
Information management
Transaction
complexity
Gaps in diagnostic
performance
measures
Degree of
decentralized
decisions making
4 out of 5 3 out of 5 3 out of 5 10
Total risk 30 out of 45

A. Pressure points due to growth
When a company decides for the business growth or expansion, it results in high pressure for
achieving increased targets, achieving expectations more rapidly and bringing even new
employees having no or little experience. In the case of Property Millionaires, in the surge of
business growth, the company has agreed to hiring new employees for the positions of
consultants. Here the risk occurs regarding hiring new employees who have either no or little
experience which may adversely impact the quality of customer service. It would not be a
favorable circumstance for the company. Apart from this, the consultants are forced to attain
aggressive sales targets at any cost and this may invite unethical practices within the
company.
1). Pressure for performance
Here, in this case, Property millionaires is a firm which provides, seminars regarding real
estate improvements. Property millionaires have expanded their business, and they had to get
requests for seminars for real estate business development and knowledge. In such a case,
Property millionaires were forced to recruit many employees, by lowering the employment
standards. The pressure to perform generally crumble the tasks, but the pressure to perform
better also can enhance their creativity, and innovation. The pressure to perform and give
good financial results can create some unintended risks developed in the pressure situation.
The pressure created to perform better can create an issue of expecting fear of failing. With
the pressure of performance, employees possibly can work out of the context, such as
unethical activity. With intense pressure of performance, in which property millionaires are in
right now, the main focus of their employees and senior management is to perform better.
With such extensive pressure to perform, companies are forced to recruit employees, with
less-skilled employees. With such pressure to perform better, employees sometimes forced to
full fill expectations, which later employees were unable to perform their true potential.
2). Rate of expansion
Here in this case study of Property millionaires, the rate of expansion of their business is
more than their ability to recruit new employees, with their standard employment
requirements. The rate at which their business is expanding is more, as they are doing good in
their business. Property millionaires providing seminars on expanding the business of
companies dealing in real estate business. The rate at which they are expanding has forced
them to increase their human resources and to recruit new employees to meet the new

demand. Such a situation has forced them to retain their existed employees, who are already
working in their organization.
With such high scores, employees of property millionaires have been forced to perform better
with time. Here in such a rate of expansion increases, it is important for the property. The rate
of expansions is the good/bad news, as the rate of expansion increases, the excess burden to
recruit new employees, and to manage the extra burden which the existed employees might
develop will be reflected and should be rectified. In such a rate of expansion increase,
companies need to develop new product lines and channels which are too necessary to match
the business boom that is been created by this productions line. But the answer is no because
should ask themselves in such case, while expanding their business, that whether they can
increase their human capacity and resources with the expansion of their business or not.
3). The inexperience of key employees
High inexperience of employees recruited or existed working in Property millionaires is also
one of the key issue or reason for growth-related pressure. Here, the scenario in which
property millionaire currently, are they have been recruited high level of employees, who are
not much experienced. The reason being the need for quick human resource capacity, to
match the growth rate. This inexperience of employees working or recruited, usually unable
to understand their job ss as quickly as possible, which is expected by Property millionaires.
Hereunder this pressure point, managers can ask themselves, and evaluate the exact number
of inexperienced new employees, that they can recruit. In such case small to medium
mistakes should be acceptable, because inexperienced and newly recruited employees, will
make mistakes, which will be a serious issue in this case (Vladyka, 2016).

B: Pressure points due to culture
Companies need to take risks, which can help their business to grow and prosper. under the
pressure points due to culture, entrepreneurial risks should be taken, as it will help the, to
expand their business also with innovation and creativity. Culture in any organization
explains the method which companies and entrepreneurs can expand their business with.
1). rewards for entrepreneurial risk-taking
According to an example, where bankers trust company entered in investment banking, with
entrepreneurial risks taken the banks had expanded their business and earning more than they
had expected. Hence to sustain the pressure points of culture, companies need to reward all
the ideas and steps taken in context with entrepreneurial risks sustained. Such risky decisions
with complete verification and risk analysis sometimes can be quite beneficial for companies
like Property millionaires. The score of this pressure point can be calculated, by
understanding the fact that how companies can manage to understand or calculate score here
in this point. Here manager can determine the percentage of products which is the cause of
entrepreneurial risky decisions taken by employees, which also should be rewarded. Such
rewards to entrepreneurial decisions taken for innovation might improve the standard or
quality of their products, including the promises which they had forced to make for the
contracts it had with their clients. In the case study of Property millionaires, if any employees
take any innovative decisions which can solve the issue of retaining and making complete use
of their sustained employees should be rewarded (Witek-Hajduk, 2018).
2). Executive Resistance to Bad News
This is an important pressure point, in such consideration of culture, where the bad news is
not circulated much, the as good news about any employee is circulated. Employees working
in companies tries to save or hide the unethical activity of their own and their colleagues with
which their relations are good. Such culture compresses all the risks which are crippling in
the organization. Employees who are impeded to criticize every decision are the ones who
can recognize risks impending in the business of property millionaires. Executives usually
surround them with people, with which they are comfortable, which shouldn’t happen
(Baron, 2017). It is because in such case, the mistakes made by the executives will not come
on the limelight, and hence it becomes difficult to sustain risks or identify risks, or any

activity which is causing the business to suffer. The manager should calculate the employees
involved in hiding the unethical activities performed by the employees.
3). level of internal competition
It is quite beneficial for companies and senior executives, also promote such internal
competition within the organization. But in such case, it is risky also. With the internal
competition among the employees, A employee who has faced any issue during their work,
he or she will not aware of their rival about that issue which they had faced. This is the reason
or effect of internal competition. Such internal competition will create a culture, where
everyone inside the company will become rival of each other. Such competition destroys key
communication among the employees. Such communication is beneficial in sharing
information about any issue faced by an employee so that others do not count the same issue.
In such a case, senior executives can determine the score of this risk, by calculating the
volume and speed of the flow of information (Mason, 2015).

C). Pressure points due to information management
1) Transaction complexity and velocity
In the business of conducting seminars, the volume or number of seminars conducted within
a month is quite important to be noted. In the real estate business, the senior management of
the property millionaire needs to expand their business, with the increase in the complexity
and velocity with which the number of seminars they are conducting in a month is increasing.
The success and innovation in the products can only be achieved by introducing new products
and services to the customers. The business of property millionaires expanded significantly,
and also the number of seminar demand over improvement in the knowledge of estates, ahs
increased significantly. It is important here to monitor the transactions, that the business is
having, such transactions involve the internal relationship with the international operations
and financial implications that it is having from the purchases it is making. Such transactions
complexity also leads to hiding the information from the senior management as such
operations have to be arranged according to the purchases it is making to sustain complex
contracts. To attain or counter this pressure companies need to understand the risk involved
with it. The complexity of the transactions and operations take part in the exposure this
pressure point gains (Bolton, 2016).
2). gaps in diagnostic performance
With such success that the property millionaire's organization is expanding, it also pressurizes
the internal reporting systems, which critically perform variables of capital employed and
order backlogs. In such situations, executives and managers try to expand this issue or
pressure so that the real reason behind the issue can be identified. Gaps in understanding the
performance of the employees should be determined in such a pressure situation in
performance. In the objective to diagnosis the sufficient performance gap with the prototype,
including the gap it creates with the performance developed, should reflect upon the margin
of profit which they are able to attain in requesting the issues which they are getting in order
to reflect upon the key aspects which will signify the described perspective it can attain.

3). Degree of decentralized decision making
It is important to note here that, the decision-making processes, involved in property
millionaires, should understand that the decisions making processes are crucial in handling
such success and growth expansion rate. When the decisions making processes are
centralised to one body, all big decisions have to take by this body, but when the business is
expanded, they can't take all the decisions regarding the activities. Hence decentralisation of
the decisions making processes, can help them to manage such high expansion rate.

Conclusion
This particular report determined the risk assessment of property millionaires, with three
pressure points based on the performance, culture and information management. This report
also discussed the importance and rectification of such risks discussed in this report, so that it
can be easily rectified in the future coming years. The company has been expanding with a
more rapid rate than its capacity of new staff hiring and induction. A risk assessment report
will develop using a risk exposure calculator that measures the likelihood of risk occurrence.

Article for reference
Simons. R. (2019). How risky is your company? Harvard business review. Available at:
https://hbr.org/1999/05/how-risky-is-your-company Accessed on: 10/9/19
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