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

This report provides a detailed risk assessment of Trading.com, focusing on governance, ethics, and sustainability. It identifies strategic, financial, and operational risks, analyzing pressure points related to growth, culture, and information management. The assessment framework considers threat likelihood and magnitude of impact to evaluate risks. The report examines the impact of rapid expansion, inexperienced employees, competitive culture, and information gaps. It also explores potential financial risks and employee management challenges. The report concludes by offering insights into the overall risk profile of Trading.com and suggesting strategies for risk mitigation and improved management practices. The analysis includes a minimum of 15 references, with at least 5 from academic sources, as per the assignment brief's requirements. The report uses a risk exposure calculator to arrive at the findings.

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

1GOVERNANCE, ETHICS AND SUSTAINABILITY
Table of Content
Introduction................................................................................................................................2
Risk assessment..........................................................................................................................2
Type of risks that Trading.com most likely to face...................................................................3
Risk assessment on Trading.com...............................................................................................5
Threat likelihood....................................................................................................................5
Threat Likelihood...................................................................................................................5
Magnitude of Impact..................................................................................................................5
A. Pressure points due to growth.........................................................................................5
B. Pressure points due to culture.........................................................................................8
C. Pressure points due to information................................................................................10
References................................................................................................................................12

2GOVERNANCE, ETHICS AND SUSTAINABILITY
Introduction
This research report is a detailed analysis of the risks that business of Trading.com is
most likely to face when performing the business. Purpose of the report is to identify the
risks associated with the business of trading.com and perform a suitable assessment. The
scenario given in the case study indicates that organization experiences the growth in a
dramatically. It has been identified that operation of the organization is expanding in a rapid
way compared to the capacity to hire and involve new employees but this a significant
problem for the organization as existing workforce is not able to deal with the constant
challenge of increasing sales and regional managers of the brand is not motivated enough to
handle the pressure.
Moreover, the scenario gives a clear picture that the brand tends to apply corporate
strategy but there is no well-defined channels for sharing information either between
themselves or with the senior management. Thus, it can be added that there is a continuous
gap of communication between the layers of management. On the other side, it has also been
identified that due to constant pressure of sales, the quality of share investment services are
decreasing, consequently, consumers’ complaints about the services are rapidly increasing. In
the case study, it was found that clients claim that they are treated well and effectively by
their consultants until they sign up for the course. So, this research report, on the basis of this
given scenario, provides a risk management analysis considering some particular elements of
the business.
Risk assessment
As put forward by Bolton, Chen and Wang (2013), every business forces risks that
could present to its success and risk is strongly known as the probability of an event as well
as its consequence. So, when it comes to a business, only business events can be considered.

3GOVERNANCE, ETHICS AND SUSTAINABILITY
So, risk management is more of a technique of sing processes, techniques and tools for
managing such risks.
So, it can be added that risk management pays attention on identifying what could go
wrong, assessing which risks could be dealt with as well as implementing strategies to be deal
with those risks. So, when it comes to the techniques of businesses, it can be added that
business could face several risks, thus, risks management could be a fundamental part of any
business strategic management. Dionne (2013) mentioned the fact that risk management
helps the brand to identify and address risks facing the businesses. For example, case scenario
of Trading.com helps to observe the fact that even though the sales are increasing but there is
high risk of failure because the organization lacks capacity. In the present report, risks has
been analysed and assessed methodically identifying the risks surrounding the clients’
feedback towards the consultancy course and management initiatives to hold the client.
Likewise, the risks have been analysed on the basis of the likelihood of an event occurring.
On the basis of the assessment, strategies to respond to such risks event have been identified.
As per the guidelines of risk management procedures, effectiveness of risk management
approaches and controls have been recorded.
Type of risks that Trading.com most likely to face
The major category of risks that business of trading.com might face is strategic, compliance,
financial and operational.
Strategic: According to Masini and Menichetti (2013), investment consultancy
services could influence the pension outcome for thousands of people. It is important that
competition within these market work effectively. When it comes to strategic risk, it is worth
telling that competition in the share investment sector is one of the significant challenges that
Trading.com might face. Nonetheless, Vershinina et al. (2016) commented that in financial

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investment consultant sector, there is a high level of involvement by some consumers in
selecting and monitoring their course provider. So, it is quite challenging for them to access
as well as assess information required to evaluate quality of the existing investment and to
identify if they would be better off using an alternative provider. Thus, it can be added that
this can help to minimize the ability of driving competition as well as reducing incentives to
compete. So, the level of strategic risk relatively medium in share investment consultancy
service.
Financial: The major financial challenge that Trading.com might face is non-
payment by consumer or growing interest charges on a business loan. However, it can be
added that the financial risks in the sector is relatively low because the current scenario of
Trading.Com indicates that sales margin is high implying that customers do not have any
such record of not paying the course investment fees and charges.
In addition to the above stated risks that Trading.com is most likely to face, there are
some risks vital to consider in the context. Kardes et al. (2013) mentioned that employee risk
management like maintaining sufficient employee numbers, cover and employee safety. In
the case study, it was studied that regional managers of the organization tends to act without a
sense of large corporations and there is no well-defined information medium for sharing
information either between themselves. Another significant area of operation found in the
business of Trading.com is that consultants are asked to meet a given a sale target that are
developed by senior management team with little or no input from either the consultant
themselves or the regional managers. It has been noted that organizational culture is highly
competitive with respect to ruthlessness. Consequently, consultants are under the growing
pressure of achieving their target which is eventually affecting the quality of services. Thus,
staff management is negatively affecting the quality of service of business. Thus, it can be
mentioned that risk in managing employees in the organization is relatively high.

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Risk assessment on Trading.com
In order to assess the risk associated with the business model of Trading.com, the following
risk assessment framework has been used.
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)
Threat Likelihood
Likelihood Definition
High (Employee
Management)
It can be mentioned that when a risk is having a high impact
on business, impact of the same could be higher
Medium (Strategic) When a business is having a medium level of risk, the impact
could be positive or negative which means, business also
might experience significant opportunities for the trade
Low (Financial) Low range of risk conventionally does not have high impact

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Magnitude of Impact
A. Pressure points due to growth
Impact (Score) Explanation Score
High (Pressure for
performance)
The existing operational scenario of
the organization is relatively high
because, the performance of previous
year helps to observe the fact sales of
the organization has been increasing
in a dramatic manner and the
operation is also expanding in a rapid
way but this is often challenging
because capacity of the organization
is relatively low. Another significant
fact found in Trading.com
consultants are ranked by the
regional managers to the sale
performance. This means
consultants’ performance are
measured on the basis of the sales
target achieved. This is actually
causing the increase in the pressure.
100
Rate of expansion
(High)
It can be added that rate of expansion
in business of Trading.com is always
there but the risk associated with it is
high because capacity organizational
100

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capacity is low. This means even
though the organization is rapidly
expanding but managerial activities
are not done properly. Scenario
indicates that managers tend to act
without a sense of large corporate
strategy, but there is a large gap in
the communication because
managers do not have adequate
access to information. It has been
identified that managers often leave
consultants alone as they do not
understand the complex language of
the consultation techniques and
managers have limited to access to
data related to performance of the
consultants. So, it can be added that
even though the business is in a
profitable stage, internal capacity and
managerial practices are not effective
enough to bring sustainability in the
growth.
Inexperience of
key employees
(Medium)
In the case study, it was learnt that
capacity of firm is relatively low in
terms of hiring and inducting. As the
50

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firm took the decision of not hiring
new people with little or previous
experience. Consequently, the firm
continues to hire skilled staff instead
of hiring new people for the concern
of cost.
B. Pressure points due to culture
Rewards for
entrepreneurial risk
taking (Medium)
It is certain that entrepreneurship
can only be rewarding with the time
and at the initial stage, struggle
cannot be escaped. After the initial
stage, the operation of Trading.com
achieved a tremendous growth
within a short period of time. So,
understanding the future time of the
business, owner engaged the
consultants in the business process
and the consultants are further
managed by regional managers so
that consultants achieve their sales
target. Thereby, it can be mentioned
that being a start-up, brand took the
risk of continuing the operation
despite the odds. So, it can be added
50

9GOVERNANCE, ETHICS AND SUSTAINABILITY
that rewards for entrepreneurship
risk taking is worth appreciating
(Kardes et al. 2013)
Executive Resistance
to bad news (High)
It can be mentioned that managers
and executives of the organization is
surrounded by several other staff in
the middle and lower level of
management. Managers did not cot
communicate with the consultants
as they only monitor the sales
figures. This is highly risky for the
operation. Bessis (2015) mentioned
the fact that a successful managers
must have to access to all
operational activities to address the
business issues. Sticking to numbers
and digits will not resolve the
internal issues.
100
Level of internal
competition (High)
It can be mentioned that level of
competition in terms of sales target
among the consultants relative high
but (McNeil, Frey and Embrechts
(2015) mentioned that when
competition in the internal
environment of the business is
100

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relatively high, organization as the
consequence might achieve a good
result but it has tom deal with the
risk of employee turnover. In
Trading. Com, the consultants
groups are in the constant
competition of achieving their sales
target given by regional managers
C. Pressure points due to information
Type of risk Explanation Score

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Transaction
complexity and
velocity
It can be mentioned that the
level of transaction complexity
and velocity in the business
transaction is there but the risks
associated with it is low
because even though the
regional managers are taking
care of the growth of the firm
but majority of the
responsibilities are left on
middle level of management
with a slow communication
process (Lam 2014). Thus,
operational and transactional
risk could be there in the
process due to lack of
communication
50
Gaps in diagnostic
performance (Low)
It can be mentioned that gaps in
the diagnostic performance is
low because, the overall
performance of Trading.com
compared to the industry
characteristic is high. Firm
achieved high performance in a
very short time
10

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Degree of
decentralised
decision making
(Medium)
When the decision making
process of a business shared
among the a large group of
authorized members, large set
of activities at the low are
quickly done but Pritchard
(2014) stated the fact such
could create problem of co-
ordination as authority lies
dispersed widely
50

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References
Bessis, J., 2015. Risk management in banking. John Wiley & Sons.
Bolton, P., Chen, H. and Wang, N., 2013. Market timing, investment, and risk
management. Journal of Financial Economics, 109(1), pp.40-62.
Dionne, G., 2013. Risk management: History, definition, and critique. Risk Management and
Insurance Review, 16(2), pp.147-166.
Kardes, I., Ozturk, A., Cavusgil, S.T. and Cavusgil, E., 2013. Managing global megaprojects:
Complexity and risk management. International Business Review, 22(6), pp.905-917.
Kardes, I., Ozturk, A., Cavusgil, S.T. and Cavusgil, E., 2013. Managing global megaprojects:
Complexity and risk management. International Business Review, 22(6), pp.905-917.
Lam, J., 2014. Enterprise risk management: from incentives to controls. John Wiley & Sons.
Masini, A. and Menichetti, E., 2013. Investment decisions in the renewable energy sector: An
analysis of non-financial drivers. Technological Forecasting and Social Change, 80(3),
pp.510-524.
McNeil, A.J., Frey, R. and Embrechts, P., 2015. Quantitative Risk Management: Concepts,
Techniques and Tools-revised edition. Princeton university press.
Pritchard, C.L. and PMP, P.R., 2014. Risk management: concepts and guidance. Auerbach
Publications.
Vershinina, A.A., Goryainova, L.V., Zhdanova, O.A. and Maksimova, T.P., 2016. State of
the investment fund market of as an indicator of the country's socio-economic
development. Journal of Internet Banking and Commerce, 21(S3), p.1.

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