MBA402 Risk Assessment Report: Trading.com Case Study Analysis

This report presents a risk assessment of Trading.com, a fictional company experiencing rapid expansion. The analysis identifies key business risks stemming from pressure due to growth, cultural factors, and information management. The report assesses strategic, financial, and operational risks, highlighting issues such as employee management, customer service, and communication gaps. The methodology employed includes a risk assessment framework that evaluates threat likelihood and magnitude of impact. The report provides insights into pressure points like the inexperience of key employees, rewards for entrepreneurial risk-taking, and gaps in diagnostic performance. It concludes with recommendations for mitigating these risks through improved communication channels, employee training, and strategic management practices. The report is based on a case study and includes a minimum of 15 references, with at least 5 from academic journals or textbooks. The ultimate goal of the report is to identify risks and provide appropriate corporate strategies to resolve them.

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

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Table of Contents
Introduction......................................................................................................................................3
Risk assessment...............................................................................................................................4
Possible threats from business risk..................................................................................................5
Strategic risks...............................................................................................................................5
Financial risk................................................................................................................................5
Operational risks..........................................................................................................................6
Risk assessment methodology.........................................................................................................6
Threat likelihood chart.................................................................................................................7
Threat likelihood..........................................................................................................................7
Magnitude of impact analysis..........................................................................................................8
Impact because of Rapid growth..................................................................................................8
Risks out of Cultural factors......................................................................................................10
Risks related to lack of Information and Communication.........................................................12
Reference List................................................................................................................................13

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GOVERNANCE, ETHICS AND SUSTAINABILITY
Introduction
The report undertaken by analysis of the case study makes descriptive assessment of the risks
identified in context to the business activities of the organisation, most of the perceived business
risks are in relation to the customer service activities of most of the perceived business risks are
in relation to the customer service activities of the organisation. The ultimate aim of the report is
to identify the risks and make suitable assessment so that the resolution of this business risk can
be done in alignment to a definite risk assessment framework.
The case study highlights that trading.com experienced Rapid expansion in business and
developed a large client base. However, the organisation was not able to deal properly with the
clients because the capacity of the workforce was Limited and there was constant pressure of
deriving maximum sales upon the consultants who had to deal with the clients directly. Other
typical business risk includes inefficiency of the regional managers who lack motivation to deal
with the situations of high pressure and shift the entire work pressure on the lower level
employees who face hard times.
Hence, the primary objective of this case study analysis will be too to provide appropriate
corporate strategies that can resolve the business risks. However, implementation of corporate
strategy will be less effective in this organisation because of the lack of any appropriate
communication channel within members of the same hierarchy or with the senior for junior level
members. Lack of communication also leads to lack of understanding between the employees.
The factors like huge work pressure on limited number of operational members and lack of
surveillance as well as guidance received by them is leading to consequences like constant
negative feedback by the customers. It has been observed by the research that the customers have

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been mainly claiming that they receive good service up to the point of signing up for the
consultation course with the trading.com company.
Risk assessment
Risk is a factor that is present in all kinds of Business and helps the organisations to either gain
high profit or experience negative consequences. Hence, while making analysis of the business
risks of any company, the related business events need to be considered only. Risk management
is in fact a technique which makes a communication of Technology, methodology as well as
medicated Framework for Risk Management to find relevant solution to the business risks.
the procedure of risk assessment in this report will make an analysis of what could have been the
detrimental outcome with the company if any of these risks would have impacted the business in
a serious way. Researchers like Arefi, Abeygunawardana and Ledwich (2016), identify that risk
analysis and management should be incorporated in any strategic management plan of an
organisation. In the same context Bessis, J., (2015), further prioritises identification of proper
risk management methods help and organisation to to analyse how any individual business risk
impacts their operations. For evidence, with organisation needs to understand that their customer
base is very broad and further enhancement of the customer base will lead to you serious issues
in dealing with them. In context to this case study, a definite methodology has been followed for
identification and mitigation of the risks which is in alignment with the customer feedback that
has been received by the organisation. The interior management practices implemented by the
organisation for efficient working as well as client retention have also been considered by the
researcher. In the section of risk analysis, the researcher has scored the individual risk based on
the likely dance of their occurrence in the organisation and the feasibility of any negative event
that might impact the organisation in context to those business risks. On the basis of the

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assessment conducted in that section, risk mitigation strategies have also been developed in order
to avoid reciprocation of those risks in this organisation.
Possible threats from business risk
The most important risk categories that trading.com should be aware of, including strategic risk,
financial risk as well as operational risks.
Strategic risks
According to the ideas of Bolton, Chen and Wang (2013), investment Consultancy Service
programs highly impacts the investment outcome of large number of customers of this industry.
Hence it is is in the best interest of the customers that the high level of market competition force
the organisations to provide best services to their clients. However, from the perspective of the
company, the competition facing them is quite difficult. Researchers like Dionne (2013), identify
that in investment Consultancy Service, the risk of customer involvement is very high and the
customers have the propensity of monitoring the outcome of the consultancy service at each step.
However, once the customers have developed a contract with a definite consultancy firm, it is
very difficult for them to decide whether they should continue receiving service from them or
concert any other consultancy provider. In this context, it can be calculated that their level of risk
regarding strategic aspects is medium.
Financial risk
The biggest financial state that the organisation of Consultancy Services might have to incur are
the the non payment from the end of the customers or any other kind of payment fraud that they
commit. Which can include the increment of interest charges against business loans also,
financial threat that all small companies have to undergo. However, in this context it also

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requires mention that financial risk for trading.com is particularly low because they have
achieved the high sales margin and frequent cases of non payment by the customers would not
have allowed them to do so. This helps us to conclude in this report that the customers generally
do not keep their payments pending and the number of fraudulent customers is very less.
Operational risks
According to the ideas of Kardes et al. (2013), in similar contacts like that of the case study,
several supplementary business risk and occur because of the reasons like shortage of employees,
as well as lack of practical employee safety policy, considering the fact there is excessive
pressure for extraction of high sales volume upon the lower level employees. This case study
also identify that the regional managers who are immediately above the Consultants I have no
sense of property consultancy and besides that their knowledge of managing critical operations
in a corporate firm is also low. On top of that, the challenge of the lack of dedicated
communication channels for sharing of information between various layers of employees is also
there. now talking about the sales targets, it can be deflected that because of maintaining the
dominant culture of imposing high business targets on the operational employees of trading.com,
the company has been able to achieve this big client base. The higher management of the
organisation is ruthless as well as typically competitive because of which they impose high sales
target on the consultants without event meeting with the regional managers or the consultants
themselves. it is evident that because of this high pressure, the quality of service they offered to
the clients will decline. Naturally, one of the most delicate areas of this company is employee
management and high risk is involved with that process. Finally, summing up in this paragraph it
can be concluded that the level of operational risk in this organisation is relatively much higher.
Risk assessment methodology

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The following model for risk assessment has been implemented in this report for analysis of the
business risk factors identified from the case study regarding trading.com.
Risk= threat likelihood × magnitude of impact
Threat likelihood chart
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
Threat likelihood
Likelihood Definition
High level
of employee
management
risk
Analysing the employee management risks it can be commented that where there is
high impact possibility of risk, the chances of impact on the organisation also very
high
Medium
level of
strategic
risk
Medium level of risk involves that the impact on the organisation can be positive or
negative.
Low level of Low risk propensity can be associated with a neutral outcome on the organisation.

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financial
risk
Magnitude of impact analysis
Impact because of Rapid growth
Impact level Explanation Scoring
The constant facial
for high performance
from the end of the
higher management is
a high level of
business risk
This kind of risk facing the company is very high because
trading.com has already achieved a dynamic performance
standard because of which the sales quality of the
organisation is also high within a very less time period of
operations. This can be critical because it has already been
specified in this report that the organisation lacks the
capacity of managing big customer base. Extreme pressure
on the consultants of the company is a big reason behind
this. The performances of the consultants are not measured
on a qualitative basis. On the contrary, the performance
measurement is done on the basis of the cells output
provided by individual employees. As a natural outcome,
we are always under high pressure of achieving the
maximum sales output by serving the maximum number of
clients in least possible time.
100
Risk of Rapid It has been already established that trading.com has a big 100

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Business expansion is
high
customer base and the rate of expansion of this customer
base is also high. On the contrary, the level of expertise of
organisation is much lower. in spite of the dynamic rate of
organisational growth, the case study analysis shows that
the internal management is very poor. Regional managers
have least knowledge about the corporate management and
also there is lack of communication channel between the
upper and lower level employees. According to the ideas of
Kerzner and Kerzner (2017), this is a very potential
business risk as lack of guidance can cause major negative
outcomes for the organisation. The regional managers do
not understand about Consultancy Service because of which
the greater challenges are needed to be faced by the lower
level employees only. Considering these factors, it can be
concluded here that although the business performance of
the organisation is now quite high with very high sales
outcomes, in the long run there will be faced by the
challenge of sustenance.
Lack of operational
experience of the
regional managers is
a high business risk.
This case study shows that the capacity of hiring and
training in this organisation is limited. This is why it can be
recommended that the employment of in-experienced
candidates should be stopped and instead of that the
organisation should look forward to employment of
50

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employees with good consultation skills so that they will be
able to handle the excessive pressure of performance in this
organisation
Risks out of Cultural factors
The entrepreneurship
risks are of medium
level
There is no doubt that undertaking entrepreneurship in the
initial part of business is rewarding. However, it is
impossible for any organisation to avoid challenge and
struggle. After the passage of the initial phase, this
organisation was able to retain their remarkable growth and
achieve a strong and big customer base in a short period.
However, in this context, it can be commented that the real
operations in the company are handled by the Consultants
and they are being managed by the regional managers, who
do not have any comprehensive knowledge about
consultancy (Lam 2014). This means that the guiding force
behind the lowest level employees in this organisation is
absolutely in effective which can be a big risk in the future.
From this context, it can be argued that the entrepreneurship
award that the organisation has received in context to the
high business volume accumulated by them in a small time
period is actually recognisable
50
Risks of Executive The top level of management as well as executive level 100

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resistance is of high
level
of management has to remember that they need to deal
with the level of stuff that belongs under them including
the lowest level of management which is the regional
management. The managerial members do not have a
proper communication network within them as well as
with the lower level employees who are responsible for
direct client handling. The managers do not understand
the course of work and they are only concerned with the
sales figures achieved by the employees. According to
the opinion of Masini and Menichetti (2013), this process
of business is very risky and there is acute need of
successful managers who can become the representative
of the employees and identify any issue they are facing.
This will be effective in reducing the internal issues and
help the company in smooth progress
Internal competition
is a high-risk
The consultants in the company are always under high
level of competition for achieving maximum sales target.
In context to this high level of internal competition, it can
be reflected that this method of business can result in
insignificant business outcomes, but in the long run this
can also result in high employee turnover.
100
Risks related to lack of Information and Communication

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Nature of risk Explanation Score
Complexities and
velocity of
transaction
The complex level of business transactions can be the
reason for high risk. Although internal management is
done by the managers, it is the lower level employees are
the consultants who are involved with direct client
handling and the immediate level of managers that is the
regional group of managers are unaware about any e
aspect of consultancy because of which the critical
aspects and challenges regarding the work have to be
handled by the employees only.
50
Gaps of Diagnostic
performance aa lo
It can be identified that the performance gaps in the
company is low because compared to the high individual
performance of this organisation, the industrial average
standard is comparatively lower
10
Decision making
risks are of medium
level
There is decentralization of decision making as well as
lack of any Central authority. This can be challenged in
the future as executive decisions in the organisation
related to client deals are all undertaken by the lower
level members of the company only.
50

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Reference List
Arefi, A., Abeygunawardana, A. and Ledwich, G., 2016. A new risk-managed planning of
electric distribution network incorporating customer engagement and temporary solutions. IEEE
Transactions on Sustainable Energy, 7(4), pp.1646-1661.
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.
Kerzner, H. and Kerzner, H.R., 2017. Project management: a systems approach to planning,
scheduling, and controlling. John Wiley & Sons.
Lam, J., 2014. Enterprise risk management: from incentives to controls. John Wiley & Sons.
Leitch, M., 2016. Intelligent internal control and risk management: designing high-performance
risk control systems. Routledge.
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.

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McNeil, A.J., Frey, R. and Embrechts, P., 2015. Quantitative Risk Management: Concepts,
Techniques and Tools-revised edition. Princeton university press.
McNeil, A.J., Frey, R. and Embrechts, P., 2015. Quantitative Risk Management: Concepts,
Techniques and Tools-revised edition. Princeton university press.
Sundararajan, S., Bhasi, M. and Pramod, K.V., 2017. Managing software risks in maintenance
projects, from a vendor perspective: A case study in global software development. International
Journal of Information Technology Project Management (IJITPM), 8(1), pp.35-54.