Risk Assessment Report for Property Millionaires: MBA402, Semester 2

This report presents a risk assessment of Property Millionaires, a company offering real estate investment advice, based on Simons' Risk Exposure Calculator. The analysis categorizes risks into three main areas: growth, organizational culture, and information handling. The assessment evaluates the company's performance in each category, providing scores and identifying the company's position within the risk zones. The report highlights the risks associated with the company's rapid growth, including pressures for performance, expansion, and the inexperience of new employees. It further examines the impact of organizational culture, such as rewards for risk-taking, executive responses to negative information, and internal competition. Additionally, the assessment considers information handling risks related to transaction complexity, diagnostic performance, and decentralized decision-making. The conclusion places Property Millionaires in the caution zone, recommending measures such as offering fixed salaries, improving organizational culture, and providing adequate training to new employees. The report provides a comprehensive evaluation of the company's risk profile and offers actionable recommendations for risk mitigation.

Running head: RISK MANAGEMENT
Risk Management
Name of the Student:
Name of the University:
Author’s Note:

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Executive Summary
This report undertakes a risk assessment of the organization Property Millionaires on the
basis of the Simons’ Risk Exposure Calculator. The report segregates the risks faced by the
organization into three broad categories, namely, risks faced by the organization due to
growth, organizational culture and information handling. Furthermore, each of these three
categories has been further segregated into three sections and score is given as per the risk
faced by the organization in each of these categories. The analysis reveals the fact that the
organization belongs to the caution zone and measures had been recommended on the basis
of this. The three measures which had been recommended are offering fixed salary to the
employees, improvement of the organizational culture and offering adequate training to the
fresh employees of the organization.

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Table of Contents
Introduction................................................................................................................................3
Purpose of Risk Assessment..................................................................................................3
Method...................................................................................................................................4
Risks due to Growth...................................................................................................................4
Risks due to Organizational Culture..........................................................................................5
Information Handling Risks.......................................................................................................7
Conclusion..................................................................................................................................9
Recommendation......................................................................................................................10
References................................................................................................................................11

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Introduction
The organization Property Millionaires is an organization which offers real-estate
investment advice and services to the ordinary people along with the various educational
seminars that the organization offers to the customers so as to educate them regarding the
real-estate business. The primary philosophy which is being used by the organization is the
fact that “anybody can become a property millionaire if they have the right mind set,
education, and support”. It is pertinent to note that in the recent times the organization is
experiencing a substantial amount of growth because of the increase in the demand of the
services offered by the organization among the customers. However, there is a mixed reaction
among the employees of the organization regarding this recent growth in the business of the
organization. For example, George, the owner of the company is excited about this growth
whereas the other employees of the company are not. This is a Risk Assessment Report of the
organisation Property Millionaires and the risk faced by the organisation will be assessed on
the basis of Risk Exposure Calculator.
Purpose of Risk Assessment
Simons in his article “How Risky Is Your Company?” (1999) highlights the different
kinds of risks that the contemporary business enterprises commonly face on the basis of their
business operations and also the strategies that use for the expansion of this business (Simons
1999). More importantly, for the effective calculation of the risk faced by the different
business enterprises he proposes the tool of “Risk Exposure Calculator” that indicates the
zone to which an enterprise belongs like safety, caution or danger zone (Simons 1999). This
is important since the enterprises on the basis of the results of this assessment can formulate
the kind of strategies which are likely to help them to mitigate the adverse effects of the risks
(Sadgrove 2016). This report will utilize Simons’ Risk Exposure Calculator to evaluate the

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risk zone to which the organization belongs and also the measures that the organization needs
to take.
Method
The report will calculate the risk faced by the organization Property Millionaires
through the use of Risk Exposure Calculator. For this, on the basis of the case study
appropriate scores have been given on each section of the calculator, namely, risk due to
growth, culture and information management. The total score of the organization is calculated
on the basis of the individual score of the organization on each of these sections to understand
the risk zone to which the organization belongs.
Risks due to Growth
The different kinds of risks that the organization is currently facing on the score of its
unprecedented growth are listed below-
 Risks on the score of pressure for growth
 Risks on the score of expansion
 Risks on the score of inexperience of the workers
George, the owner of the organization wants the workers of the organization to strive for
a higher level of growth so as to be on par with the other rivals of the organization. However,
this pressure which he is putting on the workers for a higher level of growth might adversely
affect the organization (Hopkin 2018). For example, it is seen that the workers are given an
aggressive sales target so to give a higher level of performance (Hillson and Murray-Webster
2017). The workers of the organization in order to meet their monthly targets are resorting to
the use of unethical as well as unfair practices which is adversely affecting the quality of
services offered by the organization. Thus, it is likely that because of this approach the

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organization might face various quality, customer, services and other kinds of issues. The
organization, Property Millionaires, thus, scores a point of 3 on the Risk Exposure Calculator.
The organization, Property Millionaires currently has 100 employees within their
organization and the employees are given special training so that they are being able to meet
the expectations of the organization. However, because of the expansion strategy which is
being followed by the organization currently the organization is hiring fresh individuals to
meet the required number of employees. It is pertinent to note that very little amount of
training is given to these individuals and thus the quality of services that they offer to the
customers is fast decreasing. Thus, the organization Property Millionaires has a score of 4 in
this index on the Risk Exposure Calculator.
Property Millionaires also face a significant amount of risk because of the inexperience of
the new employees that it is employing. For example, the case study states that one of the
major factors which had contributed to the growth of the organization is the high quality of
services that it offers to the customers. However, the new employees are being offered with
very little or no training and this is likely to adversely affect the quality of services that are
being offered by the organization to the customers and this is likely to reduce the satisfaction
level of the customers (Bromiley et al. 2015). Thus, Property Millionaires has a score of 2 in
this index of the Risk Exposure Calculator.
Risks due to Organizational Culture
The different kinds of risks that the organization is currently facing on the score of the
workplace which it is currently following are listed below-
 Risks on the score of rewards for entrepreneurial risk taking
 Risk on the score of executive resistance to adverse news

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 Risk on the score of high internal competition
Farrell and Gallagher (2015) are of the viewpoint that the culture which is being followed
within the spectrum of an organization greatly determines the prospects of the concerned
organization and thus it becomes important for the organizations to foster an effective culture
within the organization. The employees of Property Millionaires are required to give
seminars to the customers and depending on the quality of seminars that are being offered to
the customers they decide whether they want to opt for the services offered by the
organization or not. Furthermore, the employees are not being given any fixed salaries and
the commissions that they get depend on the number of customers that they are being able to
bring to the organization. The result of this is that the employees often take the help of
various innovative measures and seminars without the approval or permission of the
managers which can adversely affect the prospects of the organization in the longer because
of the fact that the employees often mislead the customers (Grace et al. 2015). Thus, Property
Millionaires has a score of 3 in this index on the Risk Exposure Calculator.
The executive officers and the managers of Property Millionaires not only receive the bad
or adverse news in a pleasant manner. It is pertinent to note that the organization does not
have any fixed seminar format and the employees often modify the style of seminars as per
their convenience. However, only the style or the formats of seminars which have proven to
be successful are being reported to the managers whereas the unsuccessful ones are not being
reported. More importantly, it is seen that the managers do not encourage the
experimentations of the employees to attain a higher level of success. Thus, Property
Millionaires has a score of 2 in this index on the Risk Exposure Calculator.
One of the most important aspects of the organizational culture of Property Millionaires is
the intense competition among the different employees of the organization because of the

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aggressive sales targets which are given to them. In addition to this, it is seen that employees
who are giving a higher amount of productivity are given more preference in comparison to
the ones with a lower amount of productivity. The end result of this is that employees often
resort to the use of various unethical as well as unfair means for the enhancement of the
number of customers that they bring within the fold of the organization (Carvalho and
Rabechini Junior 2015). Property Millionaires, thus, has a score of 3 in this index on the Risk
Exposure Calculator.
Information Handling Risks
The different kinds of risks that the organization Property Millionaire is currently
facing on the score of information management and handling are listed below-
 Transaction complexity and velocity
 Gaps in diagnostic performance
 Degree of decentralized decision making
As opined by Brustbauer (2016), the legislations as well as the stipulations which affect
the real-estate business have undergone a significant amount of change in the recent times
and the enterprises related to this industry need to take them in effective consideration for the
process of their business operations. However, in the particular context of the organization
Property Millionaires it is seen that the organization does not regularly updates its directory
and also the seminars which are being given to the customers by the employees are often
without the approval of the managers. The net result of this is that the organization faces a
significant amount of risk because of this and thus the organization scores 2 in this index on
the Risk Exposure Calculator.

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The case study clearly mentions that the managers of the organization Property
Millionaires often do not have concrete data regarding the actual performance of the different
employees of the organization. This is an indicative of the fact that the employees work on a
commission basis and their remuneration is decided on the basis of the number of customers
that they bring to the organization. In the absence of any concrete data the managers are not
being able to determine the actual performance of the employees or the organization and this
can pose a significant amount of risk to the organization (Chance and Brooks 2015). Property
Millionaires, thus, has a score of 3 in this index on the Risk Exposure Calculator.
Property Millionaires follows a decentralized decision making process wherein the major
decision making power is wielded by the employees of the organization. The employees thus
as per the situation modify the seminar style or format and also the packages that they sell to
the customers without any prior approval or the permission of the different managers of the
organization (Falkner and Hiebl 2015). This can pose a significant amount of risk to the
organization because of the conflict of interest between the employees, managers and also the
customers (McNeil, Frey and Embrechts 2015). Thus, Property Millionaires has a score of 2
in this index on the Risk Exposure Calculator.

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Conclusion
Figure 1: Score of Property Millionaires on Risk Exposure Calculator
Source: (Created by the Author)
The above given figure, that is, the result of the analysis of the organization Property
Millionaires on Risk Exposure Calculator clearly indicates that the organization belongs to
the caution zone since the score of the organization is 25. This means that the risks that the
organization is currently facing are within controllable limits and can be easily mitigated
through the usage of different kinds of effective strategies which will help it to address the
risks related to growth, organizational culture and information handling. This is important
from the perspective of the concerned organization because its continued growth will depend
on the effectiveness as well as efficiency with which it will be able to mitigate the adverse
effects of these risks which it is currently facing.

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Recommendation
Property Millionaires for the mitigation of the different kinds of risks that it is
currently facing can take the help of the below given three measures-
 Fixed Salary: The organization by offering fixed salary to the employees would be
able to address the performance related issues and would also be able to reduce the
fierce competition which exists among the employees in a substantial manner.
Furthermore, this would also help the organization to manage the performance of the
individual workers of the organization in an effective manner.
 Improvement of organizational culture: The organization needs to foster an
adequate congenial workplace culture within its framework so as to improve the
performance of the employees. For example, it is seen that the fierce competition
which exists in the organization is adversely affecting the culture of the organization
and thus through the inculcation of an adequate culture the organization would be able
to mitigate the performance related risks in an effective manner.
 Training Program: The organization by offering the right kind of training to the
fresh employees would be able to improve the quality of services offered by the
employees to the customers in a significant manner. It is pertinent to note that the
organization is known for the quality of services that it offers to the customers and
therefore this is likely to improve the satisfaction level of the customers in a
significant manner.

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References
Aven, T., 2016. Risk assessment and risk management: Review of recent advances on their
foundation. European Journal of Operational Research, 253(1), pp.1-13.
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.
Brustbauer, J., 2016. Enterprise risk management in SMEs: Towards a structural
model. International Small Business Journal, 34(1), pp.70-85.
Carvalho, M.M.D. and Rabechini Junior, R., 2015. Impact of risk management on project
performance: the importance of soft skills. International Journal of Production
Research, 53(2), pp.321-340.
Chance, D.M. and Brooks, R., 2015. Introduction to derivatives and risk management.
Cengage Learning.
Falkner, E.M. and Hiebl, M.R., 2015. Risk management in SMEs: a systematic review of
available evidence. The Journal of Risk Finance, 16(2), pp.122-144.
Farrell, M. and Gallagher, R., 2015. The valuation implications of enterprise risk
management maturity. Journal of Risk and Insurance, 82(3), pp.625-657.
Grace, M.F., Leverty, J.T., Phillips, R.D. and Shimpi, P., 2015. The value of investing in
enterprise risk management. Journal of Risk and Insurance, 82(2), pp.289-316.
Haimes, Y.Y., 2015. Risk modeling, assessment, and management. John Wiley & Sons.