Risk Assessment Report: Property Millionaire, MBA402, Semester 1

This report conducts a comprehensive risk assessment of Property Millionaire, a real estate investment consulting firm, utilizing the Risk Exposure Calculator based on an article from Harvard Business Review. The analysis focuses on pressure points stemming from growth, organizational culture, and information management practices. The report evaluates risks related to performance pressures, expansion rates, and inexperience of employees; entrepreneurial risk-taking, executive resistance, and internal competition; transaction complexity, diagnostic performance gaps, and decentralized decision-making. Findings indicate that Property Millionaire falls into a high-risk category, necessitating the development and implementation of risk mitigation strategies to address potential threats and ensure the company's long-term sustainability. The report also includes a detailed evaluation of the company's current practices and provides recommendations for improvement. The assessment is based on the provided case study and the HBR article.

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

1GOVERNANCE, ETHICS AND SUSTAINABILITY
Executive Summery
The report aims to gather insight into the aspects of Risk assessment and Exposure of
organizations. This case study of Property Millionaire is taken as a basis of the study. The
risks that threat the organization and the possible reasons behind them needs evaluation to
understand the organizational condition during risk situations. The Risk Exposure Calculator
is used to score the organization in each aspect that pose risk. It is seen through the report that
sudden growth and expansion, organizational culture and communication channel are the
most impactful factor when it comes to risk management. The organization, Property
Millionaire faces risk in many aspects and thus has high risk factors in individual aspects.
The report concludes that the company, Property Millionaire comes in the High Risk
Category and needs to deploy plan and strategies to mitigate the risks and impending disaster.

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Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
Property Millionaire...............................................................................................................3
The risks that Property Millionaire face.................................................................................4
Risks points due to growth.................................................................................................4
Risks points due to culture.................................................................................................6
Pressure Points Due to Information Management.............................................................8
Results of the assessment.......................................................................................................9
Conclusion................................................................................................................................10
References................................................................................................................................11
Appendix..................................................................................................................................13

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Introduction
Risk management is a process through which organizations identify the possible risks,
assess the impact that they will have on the organization and mitigate those risks in order to
ensure a secure future for the organization (Bromiley et al. 2015). In most cases, when a
company starts, it is seen that the executives are attentive towards measuring the risks and
keeps risk mitigation strategies ready. Later, when the company sees growth, they overlook
the risk related issues thinking that the present smooth running of the company will last
forever. It is during this time that the greatest of the risks appear in the organization (Gatzert
and Martin 2015). The leaders and managers are responsible for the identification, assessment
and create plans in order to manage risks that threaten an organization. They are also have the
responsibility to monitor and modify the risk management process that has been introduced.
Risk assessment is done using a tool, “Risk Exposure Calculator” that has become popular
recently (Simons, R. 1999). This tool was introduced by Robert Simons in an article in
Harvard Business Review. It facilitates the calculation of risk that they might face. In this
report, the situation of Property Millionaires has been chosen to analyze the possible risks.
The risk aspect related to the company has been evaluated and scored on the Risk Exposure
Calculator. The impact of the aggregate score and findings has been discussed in the report as
well.
Discussion
Property Millionaire
Property Millionaire is a real estate investment consultant. They provide seminars and
mentoring to common people. They run on the belief that given the correct mindset, learning
and mentoring, anyone can be successful property millionaire. The owner of the organization

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is George Kirzner, who has actively contributed to the growth of the company. They have
more than 100 employees that work in the different branches. The success of the company
started a year ago when the sales of their seminars suddenly increased. This led to a problem
as well. The company was expanding rapidly. This means that they were taking people
without much screening. The new employees were less than competent in sales. The owner of
the company created a challenging and a high performance based company. The employees
earned only through commissions on the sale that they have made. This highly competitive
environment gives birth to immoral and unethical actions. The company has a hierarchical
organizational structure where the consultants are the basic level. The regional managers
manage them. These regional managers report to a team of senior management including
George. The increase in sales is good news for George. He is happy and feels positive about
it while the regional managers of the different centers are not so sure. They feel that the
company is about to face a large downfall.
The risks that Property Millionaire face
In the opinion of Nazir et al. (2016), every organization needs risk management to
ensure overall growth and to remain prepared to mitigate them should they arise suddenly. In
Property Millionaire too, assessing risks will lead to the growth of the organization. In this
case, the sudden boom of the company turnover has some risk associated to it. The risks that
they might face are categorized into three types:
 Risks points due to growth
 Risks points due to culture, and
 Risks points due to information management

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Risks points due to growth
The main motto of every organization is to attain maximum financial gain. They also
want other developments for their organization. in this regards, the greatest dilemma that the
organizations face is whether to ensure growth by quality or by quantity. In most cases, it has
been seen that companies, in their initial years choose quantitative growth rather than
qualitative (Kowalkowski et al. 2015). In Property Millionaire too, the consultants were
forced to sell larger number of seminars in order to be able to survive in the company. Their
salary came from their personal sales and that I the reason for which they rarely followed
through after the sale was made. The pressures that are connected to growth can be
categorized into three sections:
 Risk due to pressure for performance
 Risk due to rate of expansion
 Risk due to the inexperience of the key employees.
Risks due to pressure of Performance
The company. Property Millionaire is focused solely on sales. The company’s owner,
George Kirzner only values the individual sales and rewards the high performance
employees. The idea of a permanent employee is that they work, in fixed salary with
provisions for incentives or commission if they can make sale (Lebedeva et al. 2016). Here,
the situation is different. The employees themselves earn their salary. The sudden growth of
the company is directly related to this practice. This practice has also led to consultants taking
unfair means in their sales strategy. The high competition and pitting against each other have
also resulted from this culture. This is a highly risky situation for the company for which
Property Millionaire gets 5 in the Risk Exposure Calculator (Appendix 1).

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Risk due to rate of expansion
The sudden growth of the company faces was unexpected for them for which they are
unable to manage the sudden employee requirement. The company has limited resource at
their disposal. Despite that, they had to recruit new employees in haste in order to manage the
spurt in sales. The new employees lack training and experience and thus, are less than
efficient. If the services that organizations provide are not up to the mark, the customers will
becoming unhappy (Cardona, O.D., 2013). They do not take customer feedback and ignore
their phone calls after sales. This makes the image of the company questionable and poses
threat to future prospect. Thus, the expansion of the company has led to the development
risky situation. In this aspect, the company scores 4 in the Risk Exposure Calculator
(Appendix 1).
Risk due to the inexperience of the key employees
As per Soomro, Shah and Ahmed 2016, the more experienced and efficient the
employees the more likely it is that they will deliver satisfactory service and ensure customer
satisfaction. In case of Property Millionaire, is evidently at risk here. It is previously been
established that the new employees lack expertise and experience in competitive sales field.
Post sale care and feedback procedure is an important part, which they ignore. This affects
the reputation of Property Millionaire, reducing the goodwill of the company. For this reason,
the company receives 5 in the Risk Exposure Calculator (Appendix 1).
Risks points due to culture
The organizational culture is based on the practices inside and outside the
organization. Good organizational culture leads to employee motivation and job satisfaction
(Fragouli and Ourolidis 2013). It also has the ability to increase employee performance and
increase the employee accountability of the organization. Negative organizational culture is
likely to poison the environment and cause disruption in the organization. Property

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Millionaire evidently faces some risk in this aspect. The risks that they face are of three
kinds:
 Risk due to rewards for entrepreneurial risk taking
 Risk due to executive resistance to bad news
 Risk due to level of internal competition
Risks Due to Rewards for Entrepreneurial Risk Taking
It is now evident that the company Property Millionaire faces threat from taking risks
by the entrepreneurs. In the extremely competitive company culture, only the high
performance employees are given attention (Park et al. 2013). The owner, George believes
that this is a positive attitude and analyses the employees according to their individual sales
figure and history. No other contribution is not deemed as important. The CEO rarely
receives necessary information from the regional managers about any problem. The regional
managers too are uninterested in involving themselves with the consultants. Due to this, the
consultants have the chance to engage in unethical behavior. This is the reason why Property
Millionaire receives 5 in the Risk Exposure Calculator (Appendix 1).
Risks due to Executive Resistance to Bad News
It is the responsibility of the upper management and the executive managers to handle
the bad news (Paunovic and Dima 2014). This shows how efficient the managerial
department of the company is. In case of Property Millionaire, the regional managers most of
the time do not share vital information. The lack of well-defined channel for communication
and their tendency to be surrounded by “yes” men have led to a collapse of communication
between the sales team, the regional managers and the executive board. Any failure is not
reported to the higher authorities and the executive managers, thus they believe that the

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guideline that they provide for consultation are foolproof. Thus, the company scores 4 in this
aspect (Appendix 1)
Risks Due to Level of Internal Competition
The owners practice of appreciating and rewarding the employees based on the sales
figures has resulted to the intensity of internal competition. The employees know that they
will have to make sale in order to earn their salary and be appreciated in the company. They
receive good commission for which they are interested in the job. It means that the employees
are solely motivated for monetary reasons, which is a risky situation for the company. Lack
of any non-monetary motivation might lead to sudden attrition (Neves and Eisenberger
2014). The competitiveness increased unethical practices and has reduced the brand value. In
this section, the company receives 5 in the Risk Exposure Calculator (Appendix 1).
Pressure Points Due to Information Management
The information management of Property Millionaire is also quite inefficient and is
one of the most functional reason for which the company face further risk. The risks
regarding management can be classified into three sections:
 Risk due to transaction complexity and velocity
 Risk due to gaps in diagnostic performance
 Risk due to degree of decentralized decision making
Risk due to transactional Complexity and Velocity
The main job of the consultants are to arrange free seminars to attract customers
where they explain how consumers can become experts in real estate handling. After this,
they provide face-to-face seminars where they sell their product. In order to ensure the sale of
the product, the employees go to great lengths. The competition is high in the company and

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employees may adopt processes that are not morally honorable (Hoskisson et al. 2017). This
is a significant risk and thus the company receives 4 in this context (Appendix 1).
Gaps in Diagnostic Performance
The performance appraisals of the consultants should not include their sale figure or
individual performance as the sole contributing factor (Cozmei and Şerban 2014). The
employees might make other contributions that would prove more impactful for the
organization in future. Their behavior, responsibility, regularity and sincerity are all included.
This does not happen in Property Millionaire. Their employee performance appraisal is based
completely on individual performance, thus, has scored 4 in this aspect (Appendix 1).
Degree of Decentralized Decision Making
Property Millionaire has decentralized decision making in practice. Neither the
regional managers nor the executive managers involve themselves with the seminar and sale
process. The executive managers including George are completely dependent on the regional
managers for information. The regional managers on the other hand are not interested in
knowing the sale process as they cannot decipher sales language. Though there are
guidelines, there is no check to whether they are being followed. This has led to the lax
behavior of the consultants on maintaining standards. They only focus on selling their
services by any means. Thus, in this aspect, Property Millionaire has secured a score of 5
(Appendix 1).
Results of the assessment
Property Millionaire has secured a total score of 41 in the Risk Exposure Calculator
(Appendix 1). The score is indicative of the fact that the position of the company is estimated
in the high-risk zone. They need to plan and create mitigation strategies in the earliest, bring

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changes to organizational culture and process so that the present risks can be mitigated (Muja
et al. 2014).
Recommendation
The organization needs to make certain changes in order to ensure their success in
future:
 The organization needs to keep permanent employees on a salary basis in order to
reduce intense competition.
 The seminar processes and methods that the consultants are using needs to be
monitored.
 The recruitment process needs to be improved and proper training should be given to
the employees.
 The regional managers and the higher executives need to communicate more and
create functional teams among themselves to manage the flow of information better.
Conclusion
The above discussion leads to the inference that risks are present in almost every
organization. The difference is created in the way the company adopts to identify the risks,
assess them and mitigate them so that the future of the company remains secure. It might be
expensive in the beginning though it will soon bring fruitful result. Thus, Risk Evaluation
enables the organization to create prior strategies for risk management before they arrive.

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References
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.
Cardona, O.D., 2013. The need for rethinking the concepts of vulnerability and risk from a
holistic perspective: a necessary review and criticism for effective risk management.
In Mapping vulnerability (pp. 56-70). Routledge.
Cozmei, C. and Şerban, E.C., 2014. Risk management triggers: from the tax risk pitfalls to
organizational risk. Procedia Economics and Finance, 15, pp.1594-1602.
Fragouli, E. and Ourolidis, G., 2013. The effect of culture in risk perception and its
contribution to the failure of strategic alliances. International Journal, 4(6).
Gatzert, N. and Martin, M., 2015. Determinants and value of enterprise risk management:
empirical evidence from the literature. Risk Management and Insurance Review, 18(1),
pp.29-53.
Hoskisson, R.E., Chirico, F., Zyung, J. and Gambeta, E., 2017. Managerial risk taking: A
multitheoretical review and future research agenda. Journal of Management, 43(1), pp.137-
169.
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.