Detailed Risk Assessment Report: Trading.com Business Analysis

This report provides a comprehensive risk assessment of Trading.com, a company offering investment courses and mentoring services. The analysis examines the company's rapid growth, internal competition among consultants, and the impact of lowering employment standards due to expansion. The report utilizes a risk exposure calculator to evaluate pressure points related to growth, organizational culture, and information management. Key findings highlight challenges in information channels, employee performance pressures, entrepreneurial risk-taking, and executive resistance to bad news. The assessment concludes with recommendations based on the risk factors identified, emphasizing the need for improved information flow, better management of internal competition, and strategies to mitigate the negative impacts of rapid expansion. The report provides a detailed analysis of the company's risk profile and offers actionable insights for improvement.

RISK ASSESSMENT

Executive summary
The report examined various risks of Trading.com which a company offering its
customers the investment courses and ongoing mentoring services as well. Trading.com was
established 3 years ago and then it grew into medium sized business with employing more than
100 staff from all around Australia. The report determined that the company is performing very
well in market as its course sales are increasing over one year and operations are also expanding.
As it is required by any firm that they are considering their employees accountable for stronger
or growing financial performance as well. Therefore, it has been identified that there is
increasing in need of more consultants which are lowering their employment standards by hiring
new people who could have less experience. Level of internal competition and Information
channels are the problems faced by Trading.com.

Table of Contents
Executive summary..........................................................................................................................2
INTRODUCTION ..........................................................................................................................1
Background ................................................................................................................................1
Method .......................................................................................................................................1
PRESSURE DUE TO GROWTH...............................................................................................1
RISK EXPOSURE CALCULATOR...............................................................................................2
A) Pressure Points Due to Growth..............................................................................................2
B) Pressure Points Due to Culture..............................................................................................3
C) Pressure Points Due to Information Management.................................................................4
CONCLUSION................................................................................................................................5
RECOMMENDATIONS.................................................................................................................5
REFERENCES................................................................................................................................7
APPENDIX .....................................................................................................................................9
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INTRODUCTION
Risk assessment is that procedure which describes overall process and method helps in
identifying the risk or threats and factors that are causing harm (Alviniussen and Jankensgard,
2015). This will be analysing and evaluating the risk which is included or linked with any sort or
type of activities that person is undertaking.
Background
Trading.com company was set up 3 years ago and employing over 100 employees in
Melbourne, Adelaide, Sydney and Brisbane. Trading.com is rapidly increasing their need of
employees so in return they are lowering down their employment standards and hiring new
people.
Method
In order to examine risks in the cited company risk exposure tool will be used. This
calculator is that technique or tool which is measuring likelihood of company as per risk
mentioned it is divided into 3 parts which is internal pressure due to information management,
growth and culture. So exposure of Trading.com will be calculated based on multiplying
probability of any happening of incident with potential loss occurred (Simons, 1999). The risk
exposure calculator will assess the company on the basis of three risk indicators – Pressure due
to Organisational culture, information handling and growth.
PRESSURE DUE TO GROWTH
There are many problems or risks which company is facing in this recruitment scenarios
which are as under:
1. Level of internal competition- All consultants are paid as per work done by them which
is commission basis and they are earning $10000 per each client sign in. So this was
recognized by Jospe who is the founder of company that the remuneration structure is
having financial pressure so they increased base salary to $30000. Now all employees are
given rating according to their performance and highest ranked one will be getting
bonuses, expensive gifts and luxury holidays as well. This includes higher level of
internal competition among the members of staff. The consultants are selling the courses
for $10000 each that do not allow employees to earn any amount of compensation, they
need to work very hard for selling more than 10 courses so that they can earn enough
money for their living.

2. Information channels- There are no well-defined and proper channels of information
flow or communication as there is no corporate strategy which must be laid down by
company (Wright, 2018). Not understanding language of client, limited access to
performance data of employee and spending much time in solving unanticipated
emergence.
RISK EXPOSURE CALCULATOR
The risk calculator as included in the appendix demonstrate risk exposure calculated
based on growth, culture and information management. This calculator is that technique or tool
which is measuring likelihood of company as per risk mentioned it is divided into 3 parts which
is internal pressure due to information management, growth and culture. So exposure of
Trading.com will be calculated based on multiplying probability of any happening of incident
with potential loss occurred. Then all will be added up to calculate the actual score of risk
exposure of company. The risk exposure calculator will be giving opportunity for company and
executive that they are conducting 2 most important activities. Like the first is to give different
score to all departments and activities of business by asking to managers at various levels and
then secondly comparing the given score (Gallati, pp.201-203, 2013).
A) Pressure Points Due to Growth
This is point is having intensified pressure on Trading.com to increase it sales and
productivity to achieve growth within market but that too with the resources which they already
have such as employees, capital etc. So this way of growth or expansion senior management
team will need to plan out in proper manner by setting up sales goals and profit goals (Froot,
Scharfstein and Stein, 2013). There will be intense pressure among employees to perform better
than one another but it is the duty of higher level management to manage pressure so that they
are achieving challenges and financial performance is getting better.
i) Pressure for performance
This is the first factor which is given rate according to amount of pressure which
employees of company are facing in order to meet targets set by executive managers. As there is
pressure it develop risk for employees on loss of compensation or bonus based on their poor
performance (Cabero, Perán and Relano, 2015). All employees of company are working in order
to improve their current performance based on past results so that their supervisor is happy and
giving them better rating (How risky is your company? 2018). This rating will be calling for good
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compensation and appreciation. The employee who is been able to achieve these targets needs to
be rewarded with bonus and other compensations as it is done in Trading.com. The rating is
given based on amount of pressure for improving performance is there on all employees of
company from top to bottom or lower level. Rating is given from 1-5 scale in which 1 is little
pressure and 5 is extreme level of pressure which is laid on employees of any department. So
from the risk exposure calculator of Trading.com it is included that pressure for performance in
growth is 4 of company (Simons, 1999).
ii) Rate of expansion
This is the second factor which is consider to as way and rate at which business is
expanding or growing in market. It is very much essential that company or business is growing
within market with its required rate so that it will be able to grab higher share and then earning
profits as well (Sedunov, 2016). This rate of expansion will define number of revenue and profits
which company is earning in long and short run. Trading.com is quickly increasing their
workforce or employees due to which they are lowering down their employment standards and
hiring new people. The rate of expansion will be given rating from 1-5 scale and in this
Trading.com is at rating 4 which means that it’s growing on faster pace.
iii) Inexperience of key employees
This will be included to as number of employees who are not having proper knowledge
and experience of working or handling operations of company (Suter II, 2016). It is required that
employees of company are having experience of working and operating successfully which will
be helping in growth and expansion of business. This is also given as per scale of 1-5 meaning 1
as very experienced and 5 as very inexperience. So Trading.com as per the case study it is
included that employees are very inexperienced based on this 3 is the score of company.
B) Pressure Points Due to Culture
Just Only relying on higher and improved sales target or profit goal no firm would be
able to survive in long run so there are other points which they need to consider as well (Haimes,
2015). As it is required that they are creative and innovative as well which must be there into
culture of company. But this is only done with help of whole team and they are working together
to achieve the targets of innovation (Risk Exposure Calculator, 2018). So Trading.com is highly
innovative and creatively making new course which would be helping their clients but they are
not acting like a team. All the content of course which is formed by Trading.com is independent
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of each other which are substantial value. So there must be culture of team working and building
by staff and employees of company which will be helping in lowering down pressure of culture.
i) Rewards for entrepreneurial risk taking
In the profit and revenue earning it is required that entrepreneur is ready to take risk
based on which they will be given reward which includes expansion and higher share of market.
This part will be including the potential reward that is given to people within business in way of
entrepreneurial risk taking activities (Zsidisin, Panelli and Upton, 2015). Rating 1 is very little
and 5 will be high proportion of rewards for entrepreneurial risk taking. So in regard
Trading.com is having 4 out of 5 which mean that they are getting high reward for risk taken by
executive.
ii) Executive resistance to bad news
There are both bad and good news which will be concern with business but there is time
when these executives would be resisting to hear bad news related to operations or business. So
in the case study of Trading.com it is measured that executives resistance to bad news is very
much high and it is rated to 5 which is regarded to as very high and all the time executives are
resistant to bad news.
iii) Level of internal competition
Internal competition means that all managers and employees of company are competing
with one another in way of achieving their targets and goals that is been set by higher level of
managers (Bromiley, Nair and Rustambekov, 2015). From the case study of Trading.com it is
analysed that there is very high level of competition among employees of various department and
between divisions as well. So the score out of 5 in the level of internal competition is as high as 4
within Trading.com.
C) Pressure Points Due to Information Management
This is the last set of pressure which is been included within the risk exposure calculator
which is related to flow of information into company (Busch and Kölbel, 2016). If there is no
system of management and inflow of information is very much inadequate, then this type of risk
will be increasing. Creativity and innovation are two most important pillars of any firm which is
giving it chance to employees and managers to grow based on their capabilities.
i) Transaction complexity and velocity
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This point will be including to cover that fast changing and complicated information will
be required to run business in effective manner. So as per case of Trading.com this score of
transaction complexity and velocity is 4 which means that this will be very much very great deal
for company.
ii) Gaps in diagnostic performance
There must not be any gap between the amount of information which is needed and the
actual information which is there as this would be causing problems and risk of loss of data and
information in the company (Breckova, 2016). The gap of data will be rated as per 1-5 rating
scale which is no gap and lot of gap. In case of Trading.com this gap is very high as the score is
4.
iii) Degree of decentralized decision making
In way of taking decision taken by people who are not part of central team is very high in
Trading.com. So it is included that Trading.com is having score of 5 out of 5. So based on all
data available of Trading.com it is calculated that it is having total score of 38 in all internal
pressure including growth, culture and information management. This score is between 35 to 45
which are regarded as The Danger Zone (Tsang and Yamanoi, 2016). This is defined to as
having danger zone so it is advised that company must be taking strong action in regard to all the
above based pressure.
CONCLUSION
From the report it could be concluded that risk exposure score of Trading.com is very
high which is, 38 so the above recommendations which are made should be considered by
company. This is under Danger Zone so there are certain things which company is following and
taking action on these so that risk is lower down or mitigated. The level of competition among
employees must not be so high a healthy and risk free competition is good for departments. This
score is between 35 to 45 which are regarded as The Danger Zone. This is defined to as having
danger zone so it is advised that company must be taking strong action in regard to all the above
based pressure.
RECOMMENDATIONS
There are various key pressure points such as Transaction complexity and velocity
Executive resistance to bad news Inexperience of key employees Rate of expansion etc due to
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which Trading.com scored of 5 out of 5. Based on the above report Trading.com can take the
following steps to control and manage current risks - Low pressure of performance- The employees must be having lower down pressure of
their performance so that they are been able to grow and perform (Sedunov, 2016). If
they are performing under pressure, they need to have some incentive or bonus for their
work. They should be given effective rewards to motivate them in working pressure as
well as functions must be assigned according to skills and abilities of the employees. So
it is advised that pressure of performance among employees must be low so that they are
motivated. No intense competition- There must be lower down in internal competition which must
be healthy. Each employee having equal opportunity to grow, innovate and experience is
much better than having tougher internal competition. Filling the information gap- There must not be nay gap within the flow of information
so it is required to fill up this gap. The data and information need to be flow in proper
manner which is done only when people are been having power to take part in decision
making process of company. Experienced workers- It is identified that the workers who are employed within the
company are not that much experienced they are having lack of information and
knowledge. So it is required that company is only recruiting those employees who are
having good amount of experience so that they are handling all task and activities of firm.
 Decentralising of decision making process- It is also highly recommended that company
is enabling its employees who are working should be taking part in decision making
process. With the help of employee’s role play in decision making process transparency
and delegation of authority could be easily done. This will be helping company in
including views and ideas of employees with their problem and issues faced so that it
could be helpful in implementing all policies and plans in effective manner.
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REFERENCES
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Bromiley, P., Nair, A. and Rustambekov, E., 2015. Enterprise risk management: Review,
critique, and research directions. Long range planning, 48(4), pp.265-276.
Busch, T. and Kölbel, J., 2016. Paper 3: How risky is your business? The role of institutional
context, corporate social responsibility, and rating agencies. SUSTAINABILITY AND
RISK: THE ROLE OF STAKEHOLDERS, p.97.
Cabero, J., Perán, F. and Relano, G., 2015. A medium-term integrated risk management model
for a hydrothermal generation company. IEEE Transactions on Power Systems, 20(3),
pp.1379-1388.
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Gallati, R.R., 2013. Risk management and capital adequacy(pp. 201-203). New York, NY:
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Suter II, G.W., 2016. Ecological risk assessment. CRC press.
Tsang, E.W. and Yamanoi, J., 2016. International expansion through start‐up or acquisition: A
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Zsidisin, G.A., Panelli, A. and Upton, R., 2015. Purchasing organization involvement in risk
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Chain Management: An International Journal, 5(4), pp.187-198. nt, and management.
John Wiley & Sons.
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Online:
How risky is your company? 2018. [Online]. Accessed through: <https://hbr.org/1999/05/how-
risky-is-your-company>.
Risk Exposure Calculator. 2018. [Online]. Accessed through:
<https://downloads.ts-rc.co.uk/ard/getdocument.asp?
ID=73883&AID=580&SID=10&FID=9995&LDID=130531>.
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APPENDIX
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