Trading.com Risk Assessment Report - Semester 2, 2024

This report presents a comprehensive risk assessment of Trading.com, a company offering share investment education and mentoring services. The analysis, based on the provided case study and the HBR Risk Exposure Calculator, evaluates various pressure points impacting the company's operations. The report examines risks stemming from growth, including performance pressure, expansion rate, and employee inexperience. It further investigates cultural aspects, such as rewards for risk-taking, executive resistance to bad news, and internal competition. Additionally, the assessment delves into information management risks, including transaction complexity, diagnostic performance gaps, and the degree of decentralized decision-making. The findings, which resulted in a total score of 39, which indicates that the company is in the danger zone, are used to provide recommendations for Trading.com to address its challenges and sustain growth in the competitive market.

0 | P a g e
Governance, Ethics and Sustainability

1 | P a g e
Table of Contents
Introduction...............................................................................................................................2
Risks due to Growth...................................................................................................................3
Risks due to Organisational Culture...........................................................................................4
Information Handling Risks........................................................................................................6
Conclusion..................................................................................................................................8
Recommendations.....................................................................................................................8
References................................................................................................................................10

2 | P a g e
Introduction
Trading.com established its operations three years ago in the industry of share investment
education. The company offers services of assisting its clients to invest in the share market,
and it also offers them the facilities of on-going monitoring regarding their investment. Its
operations are situated in Sydney, Melbourne, Brisbane and Adelaide. The purpose of this
report is to evaluate the case of Trading.com in order to identify a range of issues which are
faced by the management of the organisation which are likely to affect its operations. In this
evaluation, the risk assessment calculator will be used which was developed by Robert
Simons (1999) in order to give a score to different challenges of the company. The calculator
gives score to the company on a scale of 1 to 5 in which 5 is the highest score. Through the
collection of these relevant data, suggestions will be made for the enterprise with an
objective to address the challenges and sustain growth in the market. Following is a report
for Trading.com in order to assess the risks faced by the organisation.

3 | P a g e
Risks due to Growth
In this section, the factors that affect the operations of the organisation as a result of its
growth are analysed. In this regards, there are various relevant factors which are necessary
to be measured to determine the impact of the growth on the company to reduce the
pressure on employees (Batkovskiy et al. 2015, p. 243). Organisations that have established
their operations in today’s highly competitive business world face immense pressure in
relation to their performance (Chong et al. 2012, pp 205-215). This pressure affects different
operations of the enterprises such as the burden imposed on the workers to make sure that
they achieve their targets within the given timeframe (Groen, Wouters & Wilderom 2012,
pp. 120-141). In order to sustain their market growth, the management often set goals and
targets for their employees that exceed their expectations; as a result, they increase the
burden on them.
In order to sustain their growth in the market and generate a competitive advantage,
organisations expand their operations. There are both positive and negative implications of
these strategies because it increases revenue streams of the enterprise while at the same
time imposing a substantial burden on the workers to keep up with the changes
(Achtenhagen, Melin & Naldi 2013, pp. 427-442). In order to meet the targets on time,
employees slack off in their work, and they reduce their quality to deliver more results.
Without a qualified and skilled workforce, companies cannot sustain their growth and
expansion rate in the market. On the other hand, a skilled and experienced workforce
enables organisations to make sure that they remain agile to change in order to meet the
requirements of adverse market conditions (von Hippel, Kalokerinos & Henry 2013, p. 17).
Pressure of performance
Trading.com has faced work pressure-related issues since its management has implemented
goals for the workers without confirming the same with them which resulted in increasing
burden on them. Jospe provided that without the effective performance of the employees,
the corporation cannot sustain its performance. Although setting the targets high and
establishing a limited deadline to achieve those targets resulted in making it difficult for
employees to discharge their obligations. The annual salary of $30,000 received by

4 | P a g e
employees is very low and it is not enough for them to earn a decent living based on which
the organisation scored 3 out of 5 points.
Expansion rate
Jospe has highlighted that the company is not able to hire and retain enough staff members
to meets the requirements of its expansion strategy. They are also competing with each
other to earn commissions and other expensive gifts. It imposes a burden on the current
workers which resulted in increasing burden on workers due to which it scored 5 out of 5
points.
Inexperience of employees
Jospe understands that this is a major issue because the company is not hiring enough
skilled and experienced workers as per its requirements. The enterprise relies on its
consultants to make sure that they bring customers in the company. It adversely affects the
relationship between the organisation and its customers since they are less likely to
continue hiring the services of the company and visit its webinar if they did not receive
adequate support from the employees. Thus, a score of 5 is given to the organisation due to
its lack of ability to hire qualified and experienced workers.
Risks due to Organisational Culture
The cultural aspects of an enterprise affect its operations, and these factors are necessary to
be taken into consideration by the management to achieve greater results (Nordlof et al.
2015, pp. 12-135). Without taking calculated risks, the companies are not able to stay
relevant even in adverse market conditions since they are more likely to face challenges due
to lack of innovation and risk-taking approach (Brettel, Chomik & Flatten 2015, pp. 868-885).
Entrepreneurial risk-taking is crucial for the growth of an organisation since it allows them
to develop products and services as per the demands of the consumers (Kreiser et al. 2013,
pp. 273-291). It also assists them in identifying potential opportunities to conduct their
operations in alternative ways to make sure that they reduce their operating costs and
increase the quality of their products and services.

5 | P a g e
The senior-level executives are responsible for identifying the factors that negatively affect
the corporations to make sure that they are able to implement future strategies which allow
them to stay relevant in adverse market conditions (Clark & Sikkink 2013, pp. 538-568).
Through internal competition policies, corporations are able to promote the productivity of
employees to make sure that they achieve their targets within the given timeframe. The
culture of the organisation should support the competition between employees to make
sure that they positively rely on competition to improve their productivity rather than
relying on the competition to create a negative workplace environment (Galuscak et al.
2012, pp. 802-812).
Rewards for risk-taking
Trading.com did not promote entrepreneurial risk taking while managing its operations. The
enterprise has not implemented policies to promote innovation in the workplace. It still uses
the traditional approach to manage its operations based on which the top level executives
did not collect information from regional managers while forming business strategies. They
also did not collect any inputs from the consultants that directly deal with customers. Due
to the lack of engagement between them, there is not enough data available for the senior
executives to make sure that they are aware of market changes, and they are not able to
identify factors that affect their operations due to which it scored 5 points in this regards as
this organisational culture negatively affect the growth of the enterprise.
Executive resistance to bad news
In the case of Trading.com, this is a major issue which affects the company. The regional
managers did not encourage employees to tell them bad news because they have
surrounded themselves with “yes” men and women. They only agree with the decisions of
the managers and did not critique them which create a negative culture in which correct
information did not reach up to the top level management. The company received 4 points
in this regards due to a negative culture.
Internal Competition
There are various policies which are implemented by Trading.com in order to make sure
that it promotes internal competition in the culture. However, these policies are not

6 | P a g e
effective since they lead to promoting conflict between employees which lead to creating a
negative workplace environment. The employees who are new in the workplace also find it
difficult to build a relationship with other workers. They are more likely to be discouraged in
their work, and it also affects their relationship with customers due to which 5 points are
scored by the company in this regards.
Information Handling Risks
The information in an organisation should be handled in an appropriate manner to make
sure that the top level management has access to accurate and relevant information which
is important to develop effective business strategies in the company (Alhawari et al. 2012,
pp. 50-65). Through effective implementation of the information system, companies are
able to make sure that they transfer relevant information regarding the business
transactions with the top and low-level managers which allow them to effectively handle
the information (Blundell-Wingnall, Atkinson & Roulet 2014, pp. 43-68).
It is important that the management implements effective policies which are targeted
towards identifying gaps in the performance of the enterprise to make sure that they stay
relevant even in adverse market conditions (Jalali et al. 2014, p. 74). The corporation that
wanted to improve the effectiveness of their decision-making process, they have the option
to decentralise their decision making (Reina et al. 2015, p. 14). In this process, the
corporation can rely on the insights of lower managers and employees to form effective
business policies which allow them to prepare for the rapid changes in the adverse market
conditions (Mankad 2012, pp. 128-140).
Transactions’ complexity
There are a number of complex transactions in the operations of Trading.com which are also
generated at high velocity. It is important that experienced employees are hired who are
able to use such information to build a strong relationship with customers to make sure that
they come to the webinar in the future. The relevant information regarding customers
which are available at consultants is not collected by the executives of the enterprise due to
which complexity and velocity of transactions are not handled in an effective manner. It
scored 4 points in this regards due to the lack of effective information system.

7 | P a g e
Gaps in diagnostic performance
Trading.com has not implemented any policies that allowed the management to collect
relevant information regarding consumers and their demands from the organisation which
makes it difficult for them to identify the gaps in their process. The management did not
have any clue regarding why specific departments are performing better than others due to
which it scored 3 points in this regards since the pressure on the employees is increased.
Decentralised decision making
Trading.com has not implemented any policies that support the decentralisation of its
decision making because the top level executives did not allow lower level managers and
consultants to contribute to the decision-making process. People who remain in contact
with the customers and understand their demands and needs are not taken into
consideration by the management due to which they scored 5 points in this criterion which
increases challenges for the organisation.

8 | P a g e
Conclusion
Figure 1: Risk Exposure Calculator
(Source: By Author)
Trading.com received a total score of 39 in the calculator which shows that it is in the
danger zone. The enterprises that received a score in this model which is above 35 are
considered as facing dangers in their operations. A score which is between 21 and 34 is
considered as a call for help and parties must become cautious to take corrective steps. A
score between 9 and 20 is safe for companies. It is important that Trading.com and its
management take corrective actions in order to address the challenges faced by the
enterprise to stay relevant in the market. Changes in policies are necessary to make sure
that the enterprise is able to sustain its growth in the market.
Recommendations
There are various factors which are necessary to be taken into consideration by the
management of Trading.com to make sure that they address the challenges faced by them.
Following recommendations can assist them in considering those factors and make
necessary changes in the policies which will allow them to improve their profitability. The

9 | P a g e
company should increase the hiring of skilled and experienced workers while slowing down
its expansion rate to ensure that the current customers did not compromise in terms of
quality of services. The enterprise should reduce the level of internal competition between
enterprises, and a supporting culture should be promoted to make sure that new and
current employees did not face challenges in the organisation. Engagement between the
managers should be increased with employees and consultants to make sure that they are
able to contribute their expertise into the decision-making process of the enterprise in order
to form effective policies. This can be achieved by adopting a decentralised information
system in the workplace through which the management will be able to form policies which
taking into consideration the interest of parties which will increase the effectiveness of the
decisions in the organisation. Through these changes, the company will be able to ensure
that it addresses the major challenges which it faced to sustain its growth in the market.

10 | P a g e
References
Achtenhagen, L, Melin, L & Naldi, L 2013, ‘Dynamics of business models–strategizing, critical
capabilities and activities for sustained value creation’, Long range planning, vol. 46, no. 6,
pp.427-442.
Alhawari, S, Karadsheh, L, Talet, AN & Mansour, E 2012, ‘Knowledge-based risk
management framework for information technology project’, International Journal of
Information Management, vol. 32, no. 1, pp.50-65.
Batkovskiy, AM, Konovalova, AV, Semenova, EG, Trofimets, VY & Fomina, AV 2015, ‘Risks of
development and implementation of innovative projects’, Mediterranean Journal of Social
Sciences, vol. 6, no. 4, p.243.
Blundell-Wignall, A, Atkinson, P & Roulet, C 2014, ‘Bank business models and the Basel
system: Complexity and interconnectedness’, OECD Journal: Financial Market Trends, vol.
2013, no. 2, pp.43-68.
Brettel, M, Chomik, C & Flatten, TC 2015, ‘How organizational culture influences
innovativeness, proactiveness, and risk‐taking: Fostering entrepreneurial orientation in
SMEs’, Journal of Small Business Management, vol. 53, no.4, pp.868-885.
Chong, DS, van Eerde, W, Rutte, CG & Chai, KH 2012, ‘Bringing employees closer: the effect
of proximity on communication when teams function under time pressure’, Journal of
Product Innovation Management, vol. 29, no. 2, pp.205-215.
Clark, AM & Sikkink, K 2013, ‘Information effects and human rights data: Is the good news
about increased human rights information bad news for human rights measures?’, Human
Rights Quarterly, pp.539-568.
Galuscak, K, Keeney, M, Nicolitsas, D, Smets, F, Strzelecki, P & Vodopivec, M 2012, ‘The
determination of wages of newly hired employees: Survey evidence on internal versus
external factors’, Labour Economics, vol. 19, no. 5, pp.802-812.

11 | P a g e
Jalali, A, Jaafar, M, Talebi, K & Ab Halim, S 2014, ‘The Moderating Role of Bridging Ties
between Risk-Taking, Proactivness and Performance: The Evidence from Iranian
SMEs’, International Journal of Business and Management, vol.9, no. 5, p.74.
Kreiser, PM, Marino, LD, Kuratko, DF & Weaver, KM 2013, ‘Disaggregating entrepreneurial
orientation: the non-linear impact of innovativeness, proactiveness and risk-taking on SME
performance’, Small Business Economics, vol. 40, no. 2, pp.273-291.
Mankad, A 2012, ‘Decentralised water systems: Emotional influences on resource decision
making’, Environment international, vol. 44, pp.128-140.
Nordlof, H, Wiitavaara, B, Winblad, U, Wijk, K & Westerling, R 2015, ‘Safety culture and
reasons for risk-taking at a large steel-manufacturing company: Investigating the worker
perspective’, Safety science, vol. 73, pp.126-135.
Reina, A, Valentini, G, Fernández-Oto, C, Dorigo, M & Trianni, V 2015, ‘A design pattern for
decentralised decision making’, PLoS One, vol. 10, no. 10, p.14.
Simons, R 1999, How Risky Is Your Company?, HBR, viewed 13 May 2019, <
https://hbr.org/1999/05/how-risky-is-your-company>.
von Hippel, C, Kalokerinos, EK & Henry, JD 2013, ‘Stereotype threat among older employees:
relationship with job attitudes and turnover intentions’, Psychology and aging, vol. 28, no. 1,
p.17.