Kaplan Business School MBA402: Trading.com Risk Assessment Report

This report presents a risk assessment of Trading.com, a company offering educational webinars and mentoring services in the stock market, based on the Risk Exposure Calculator developed by Robert Simons. The assessment identifies pressure points related to growth (pressure for performance, rate of expansion, and inexperience of key employees), culture (rewards for entrepreneurial risk-taking, executive resistance to bad news, and level of internal competition), and information management (transaction complexity and velocity, gaps in diagnostic performance, and degree of decentralized decision making). The report provides a detailed analysis of each pressure point, assigning scores, and offering specific recommendations to mitigate identified risks and improve the company's overall governance, ethics, and sustainability. The report uses a minimum of 15 references, with at least 5 from academic journals or textbooks, to support its findings and recommendations.

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Governance, Ethics and Sustainability

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Table of Contents
Introduction................................................................................................................................2
Risk Exposure Calculator...........................................................................................................3
A. Pressure points due to growth......................................................................................3
B. Pressure points due to culture......................................................................................5
C. Pressure points due to information management.........................................................7
Conclusion................................................................................................................................10
References................................................................................................................................11

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Introduction
Trading.com offers its customers the services of educational webinars on the stock market to
teach them above the basics of investing, and they also provide them mentoring services. It
has hired 100 employees, and its operations are situated in Melbourne, Adelaide, Brisbane
and Sydney. The objective of this report is to evaluate the case of Trading.com in order to
identify the key risks faced by the company. In order to identify these risks, the Risk
Exposure Calculator (REC) will be used, which was developed by Robert Simons. This
report will also analyse the total score of the company and recommendations will be given for
the company to address these issues.

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Risk Exposure Calculator
Robert Simons provided the REC in order to help companies in identifying their risks faced
by them. The companies receive a score on different dimensions of this calculator on a scale
of 1 to 5 (5 being the highest score) (Simons 1999). After providing the score, the total score
assists in identifying the zone in which the company manages its operations. A company
which receives a score between 9 and 20 is in the safe zone. The company which receives a
score between 21 and 34 is considered as in the caution zone. In case the score of the
company is between 35 and 45, then it is in the danger zone, and it has to take immediate
actions to reduce its risks or else it could fail in the market (Simons 1999).
A. Pressure points due to growth
Organisations face a number of challenges in the market as a result of their growth which
increases their risks and makes it difficult for them to conduct their business operations in an
effective manner (Buchanan & McCalman 2018). A high rate of business growth imposes
pressure on the employees of the company to make sure that they continue to perform better
and meet their targets in order to sustain the growth of the enterprise (Bronkhorst 2015, pp.
63-72). This pressure affects the growth of the company, and it creates challenges for the
enterprise since its customers did not receive satisfactory services from the employees which
affect their relationship (Odle-Dusseau et al. 2016, p. 296). A fast rate of business expansion
also creates challenges for the company in case it did not have an adequate number of
experienced employees that are able to handle the pressure (Arnaboldi, Lapsley & Steccolini
2015, pp. 1-22). The lack of experienced employees also creates pressure on the current
employees since they are not able to meet their targets, and they also did not deliver effective
services to customers.
i) Pressure for performance
The burden which is imposed on employees in order to meet their target and continue their
performance to sustain the growth of the company is referred to the pressure for performance.
Score: 5
Reasons

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The reason for this score is that Trading.com is rapidly expanding its operations in the market
due to which the management team is setting high targets for employees without consulting
with them, which imposes pressure on them. There are only 100 employees who are working
to manage the operations of the company, which also increases pressure on them. Employees
work on a commission basis, and they receive a fixed salary of $30,000, which is very low,
which also increases pressure on them.
Recommendations
It is recommended that the senior management team should consult with employees while
setting their targets to reduce their pressure. The fixed salary of employees should be
increased to reduce pressure faced by the employees.
ii) Rate of expansion
The rate of expansion is referred to the actions of the company to expand its operations in
new areas in order to reach a new customer base.
Score: 5
Reasons
Trading.com is rapidly expanding its operations since the company has already established its
operations in four cities with only 100 employees. Jospe Drake has provided that the
company did not have an adequate number of experienced employees to handle the pressure
of business growth. However, the company is hiring employees without sales experiences,
which are negatively affecting customer mentoring services in the company since their
complaints are increasing.
Recommendations
The company should slow down its business expansion plans until it hired an adequate
number of experienced staff members. It should hire employees who have adequate
experience in this field and who are able to deliver effective mentoring services to customers
by increasing its employment standards.
iii) Inexperience of key employees

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The inexperience of employees defines that lack of ability to understand the work and
providing satisfactory services to customers (Koch & Salterio 2017, pp. 117-142).
Score: 5
Reasons
The number of experienced employees in Trading.com is low, and it has further lowered its
employment standards to hire employees who did not have experienced in this area. It will
reduce the growth of the company and put pressure on employees, which will harm the
customer services as the number of complaints is already increasing.
Recommendations
The employment recruitment standards should be increased to make sure that the company
only hires experienced employees in this field. Training programs can be established by the
company to improve the expertise of their employees to make sure that they deliver effective
mentoring services to customers.
B. Pressure points due to culture
The organisational culture is a key element that supports the growth of the company since it
includes the behaviour of its employees and the management by encouraging them to take
entrepreneurial risks which improve the operations of the company. Without entrepreneurial
risk-taking, companies cannot understand their customers’ demands, and they cannot offer
them products or services which meet their requirements that lead to the growth of companies
(Randerson 2016, pp. 580-600). This behaviour can only be promoted by the company if
there are adequate rewards available for employees and managers which encourage them to
take bigger risks for the benefit of the company (Bacq et al. 2017, pp. 639-659). The
executives should not resist to bad news in the workplace, and they should promote
constructive criticism to make sure that relevant information is available to the management
when they take business decisions (Hillson & Murray-Webster 2017). If executives resist bad
news, then they are less likely to take entrepreneurial risks in the workplace. The culture of
the organisation should also support internal competition which encourages employees to
improve their performance; however, the intensity of the competition should be managed to
make sure that a positive work environment is created in the organisation in which employees
work as a team (Murray-Webster & Hillson 2016). In case employees become ruthless, then
they are less likely to help each other or focus on delivering quality services to customers

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which harm the relationship of the company with its customers (Ellenkamp et al. 2016, pp.
56-69).
i) Rewards for entrepreneurial risk-taking
Entrepreneurial risks taking encourage employees to risk big in order getting even bigger
rewards, which lead to supporting the growth of the company.
Score: 4
Reasons
There are no policies which are implemented by Trading.com that rewards employees to take
entrepreneurial risks in the organisation. They only receive rewards for high sales, and the
senior management team did not consult with them while taking risks, which leads to failure
of courses.
Recommendations
Instead of providing rewards for the performance of employees, they should be rewarded for
taking entrepreneurial risks in the organisation. The senior management team should also
collect relevant data from the employees and regional managers while making decisions
which will allow them to take calculated risks that will lead to the success of the courses of
the company.
ii) Executive resistance to bad news
It is referred to the attitude of the senior management towards listing to bad news by the
employees and lower management regarding the failure of their actions.
Score: 5
Reasons
All the regional managers in Trading.com are surrounded by ‘yes’ men and women who just
agree with their every decision. They did not criticise their decisions or provide them
valuable feedback to improve current policies. The senior management team also resist bad
news since they did not collect feedback from regional managers or employees regarding the
performance of current business practices.

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Recommendations
The management should promote a positive culture by removing ‘yes’ men and women and
encouraging employees to provide their criticism and ‘bad news’ to the top level
management. The senior management team should also consult with them to hear their
opinions while forming business strategies.
iii) Level of internal competition
Internal competition is referred to the competitiveness between employees in an organisation.
Score: 5
Reasons
Trading.com has a highly competitive work culture since employees work on a commission
basis, and top performer receives expensive gifts and holidays by the management.
Employees are pitted against one another rather than promoting them to work collaboratively.
It makes it difficult for the company to deliver satisfactory mentoring services to customers
since employees solely focus on increasing their sales figures.
Recommendations
A fixed salary should be given to employees, which is enough for them to live a decent life.
They should not be pitted against one another; instead, they should be encouraged to work
collaboratively to work as a team which will reduce ruthlessness from the culture, and it will
promote effective customer services.
C. Pressure points due to information management
The management should implement policies in the organisation that effectively handle the
flow of information to make sure that relevant detail is available to the management which
allows them to make informed decisions (Parsons et al. 2015, pp. 117-129). The transaction
complexity and velocity should be taken into consideration by the management to record
relevant data and ensuring that the performance of the company is assessed properly (Chu,
Chau & So 2015, pp.209-225). Through effective management of information, the company
can identify key gaps in its performance and implement policies to address those gaps to
improve its performance. It can be achieved when the management take informed decisions
while collecting information from different sources. In order to support this structure, the

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management should rely on decentralised decision making to distribute the power of taking
decisions between lower level management and employees (Thomas et al. 2016, pp. 405-
425). It allows them to use their expertise to make decisions which allow them to expand the
growth of the company and achieve its targets (Rached, Bahroun & Campagne 2016, pp.
7274-7295).
i) Transaction complexity and velocity
The complexity of transactions and their velocity should be monitored by the management to
make sure that they have access to relevant information when they take business decisions.
Score: 3
Reasons
The complexity and velocity of transaction in Trading.com are not monitored by the
management. They simply focus on expanding their operations without handling the issue of
the growing number of consumer complaints.
Recommendations
Adequate framework should be adopted by the company to monitor and record the
complexity and velocity of transaction and such information should be shared with top-level
management on time, which will allow the company to make informed decisions.
ii) Gaps in diagnostic performance
Identification of gaps in the performance of the company assists it in ensuring that key factors
that reduce the productivity of employees and the effectiveness of its products and services
are identified.
Score: 4
Reasons
No policies are implemented by Trading.com to identify the gaps in its performance. The
only way through which the senior management team identify the gaps is through the sales
figures which are often not sent by the regional managers or not sent at all.
Recommendations

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Policies should be implemented to monitor the performance of the consultant through
consumer feedback to make sure that the management identifies the gaps in their
performance and fill up those gaps to improve the performance of the company.
iii) Degree of decentralised decision making
In decentralised decision making, the power to take decisions is distributed between lower
management and employees rather than limited to top-level management.
Score: 5
Reasons
Decisions in Trading.com are taken by Drake and the senior management team with
consulting with regional managers or employees.
Recommendations
Interactive control system should be adopted by the company to increase interaction with
employees and regional managers so that they can provide their expertise in decision making.
Decision-making powers should be decentralised to make sure that it is not limited to the
senior management team only.

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Conclusion
Figure 1: REC Score of Trading.com
(Source: By Author)
In conclusion, Trading.com has received a score of 41, which shows that it is operating in the
danger zone, and it is facing a number of risks which are likely to harm its growth in the
future. Identification of these risks is necessary, which will allow them to ensure that
adequate policies are implemented to address these risks in a timely manner by the
management. The recommendations given in the report should be followed to make sure that
the company addresses these risks in a timely manner.

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References
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