Risk Assessment Report on Trading.com (MBA402 Assignment)

This report presents a risk assessment of Trading.com, a company specializing in share investment courses, based on a case study and the provided HBR article. The assessment evaluates pressure points across three main areas: growth, culture, and information management. Under growth, the re...Read More

Risk Assessment 1
RISK ASSESSMENT
Name
Course
Tutor
University
City
Date

Risk Assessment 2
Pressure point due to growth
Pressure for performance
In business, most, if not all organizations set ambitious goals and mainly focus on
achieving them. It would be safe to mention that these firms in question are result oriented.
While these results are obtained both financially and on paper, there exist many loopholes
created by the seeming success story of the firm (Ainin, and Hisham, 2008, 2). Concerning the
above statements, the success of Trading.com will be short live if not correctly managed. In the
organization’s business models, their exits numerous evidence of performance pressure put on
the employees.
The company’s senior management, for instance, have a responsibility of making new
courses that the business entirely depends on. Following their strategy, the team members
independently develop the course content and only come back when their work is done and is of
substance. The region managers also face the same pressure, their focus is mainly on the sale
figures and making performance report that they ought to present to the senior managers on time.
This strategy is with no doubt destined to failure and the risk posed it to high (Li, and Tang,
2010, 57). What is more, the internal competition is very high to the point of ruthlessness. In
accordance to the evidence provided the company scores on performance pressure is a 5, which
is the highest risk exposure in the scale.
Rate of expansion
The rate of expansion could be considered as one of the yard-stick to measure the success
of a company. Development of business indicates good results and positive growth, which is the
aim of every organization managers (Grégoire, 2009, 22). But, without careful consideration of
the factors that would aid in the expansion of a company, firms are exposed to risks that they

Risk Assessment 3
may not recover from if constrained by them (Calero, Bedi, and Sparrow, 2009, 1146).
Trading.com is experiencing rapid growth and expansion. It has opened four more offices and
employed over 100 employees since it began, and yet still they are in need of more staff due to
the abrupt high course sales that went through the roof. Their expansion rate is more than their
capacity to hire and induct new team to support the business (Fels, 2016, 2). They are exposed to
high risk of level 4 since they will ultimately compromise the quality of delivering the course by
employing below standard personnel to keep up with the demand.
Inexperience of key employees
With rapid expansion, comes another aspect of un-professionalism. The high expansion
rate has high risk such that there will be high levels of compromises in a bid to meet the demand
(Burrus, Jackson, Xi, and Steinberg, 2013, 55). For instance, Trading.com high rate of expansion
forces the management to seek a quick solution, to employ more staff for example. In such a
short time, it almost impossible for the new staff to familiarize with the company’s values and
culture, let alone understanding the course they ought to teach new clients (Young, and Hasler,
2010, 37). Notably, it is due to the inefficiency caused by unskilled staff members that have
increased customer complains in trading.com. In regards to high numbers of new clients coming
aboard with the ratio of new staff to be employed, with less than 12 months of experience in the
company; Trading.com scores a risk exposure of 5.
Recommendation
Some of the levers control should be employed to handle the pressure on growth (Fels,
2016, 3). The company owns a philosophy that states; ‘anybody can become a successful share
investor if they have the right mindset, education, and support.’ This belief system should be
instilled and followed to monitor the pressure point due to growth since the client only succeeds

Risk Assessment 4
in share investment only when they have quality education and enough staff support.
Trading.com could also manage the order processing to prevent oversubscription of clients to
their services. This could be achieved by having a diagnostic control system to monitor the
performance of the company
Pressure point due to culture
Rewards for entrepreneurial risk-taking
Generally, in most business practices, risk-taking is encouraged, and risk takers are handsomely
rewarded when everything goes there way (Borio, and Zhu, 2012, 250). However, as true as the
saying ‘too much of anything is poison’ high involvement in risk-taking puts the company at
high levels of risk. Entrepreneurial risk should be taken but under favorable conditions, lest the
risk taker gets overconfident. Trading.com has exposed itself to high levels of risk by way of
their business conduction. Exposures to high risks are seen in the payment of consultant through
commission basis. Consultants are forced to over-promise to attract more clients for them to
make enough money for their salary; hence the overstretched numbers of new clients (Wang,
2016, 679). The Lone Ranger attitude that top management face while making new course
content for the business survival is also another aspect that shows the company is soaring high in
risk posed to its business. Increased customer complain due to under service from Trading.com
Company and increased frequency of new courses failure being the ultimate indication of the risk
posed rewards the business a risk level of 5. This is because the commission based salary will
make consultant compromise in their duties to earn more. The exceeded customer capacity will
lead to inefficiency while the lone ranger attitude puts pressure on the managers, limiting their
productivity and focus in their department.
Executive resistance to bad news

Risk Assessment 5
Crucial business information flow varies from one company to another. The variation is
brought about by the differences found in the culture of the organization (Cornelissen, 2008, 62).
In other words, there is a chain of command to be followed if an employee wishes to relay
information to their executive. In most cases, successes of an organization relay how fast
information reaches the top management for immediate decision making since managers rely on
business information to make an informed decision. However, organizations that are strictly
bureaucratic and holds the assumption that ‘the boss knows it all,’ decision-making process is
prolonged, this exposes the business to risks; especially, for organization managers who do not
want to hear bad news from their subordinates and employees (Wong, Ormiston, and Tetlock,
2011, 1217). For instance, in Trading.com, the organization manager do not relate well to each
other since there are no clear communication channels.
Additionally, they are surrounded by employees who fear to communicate with their superiors;
therefore, there is limited communication between the management and the employees. This
aspect of Trading.com Company earns exposure to the risk of 4 since they listen to the bad news
for most of the time. Refusing to listen to any information relayed by employees is placing the
company at risk of not making a great decision that would otherwise propel the company to
greater heights.
Level of internal competition
Internal competition is essential for the productivity of the employees and beneficial to
the company as a whole. Furthermore, it is due to the internal competition that most companies
make more than noticeable progress (Mishina, Dykes, Block, and Pollock, 2010, 718). Like
most things that have advantage and disadvantage, internal competition holds the potential of
bringing adverse effect to an organization. Taking from Trading.com case study, its internal

Risk Assessment 6
competition negatively affects not only the morale of the employees but also the company’s
progress as well. The company’s competitive culture is very high such that it is considered
ruthless, resultantly, this decrease information sharing between departments. This type of
competition endangers and puts the company at high risk of level 5; this is because; the
Company stands little or no chance of attaining the set common objective. What is more, the
firm’s rewarding system of luxury holidays holds a risk of motivating the employees to gamble
with the company’s assets and tamper with the records in an attempt to enhance their
performance for the reward.
Recommendation
Installing an internal control system is one way of measuring the productivity of
employee for companies. As such, any activities that have the potential to jeopardize the
company’s reputation or put the company in risky circumstances are monitored, and relevant
authorities are notified. Also, a control system that is interactive and promotes learning is a
strong suggestion to Trading.com (Ainin, and Hisham, 2008,23 ). The system would open
communication channels whereby employees would communicate with managers without
unnecessary confrontation. Trading.com should have a rewarding system that is aligned with the
company’s objective. This would ensure beneficial gains for both the employee and the
organization. Additionally, such a rewarding strategy does not entice employees to compromise
their result while chasing after luxurious rewards.
Pressure points due to information management
Transaction complexity and velocity
Transaction complexity is caused by the interrelation of business parts where the boundaries
between each part are partially eroded (Figl, and Laue, 2011, 462). However, the complexity of

Risk Assessment 7
business is relative and is seen differently by different people in the organization. The major
problem that would put most companies in risks is complexity viewed by managers of
companies. There exist a high risk when managers do not understand the transaction complexity
of a business, especially that which is caused by the high velocity of transactions. In relation to
the above statements, regional managers at Trading.com Company expose the organization to
risks level of 4 due to their inability to comprehend the complex language of the consultation
procedures. Without fully understanding the business procedure, managers cannot be in a
position to manage the velocity of the business transaction. Hence, they-managers- are not in a
place to tell what is approved what is not under the company’s policy.
Gaps in diagnostic performance
In any business practices, a diagnostic analysis is done to determine the direction of a
business. This is to say, for a company to improve there has to be measurement done, and the
information should be well kept for future reference (Brynjolfsson, Hitt, and Kim, 2011, 23).
Therefore, data from performance indicators are vital to the company and should be held in an
organized manner for easy access and later use by managers. The absence of this information
exposes the company to endangering risks. Regional managers of Trading.com organization are
risking the company’s future by not submitting the monthly and course sale on time. By not
submitting at all, the managers earn the company exposure to risks of level 5. Information gaps
in performance diagnosis could be the reason that explains best why Trading.com managers keep
resolving flares and focus on emergencies. Not submitting reports that carry performance
diagnosis hinders the senior managers from making a fundamental decision that would otherwise
see the company at a better position than the current one.
Degree of decentralized decision making

Risk Assessment 8
There are some benefits in decentralized decision making to be gained in strategy, one of which
is giving ample time to senior managers to handle bigger and pressing issue (Figl, and Laue,
2011, 463). In extreme cases of decentralized decision making such as, for instance;
Trading.com business model has an adverse effect on the company’s strategy. The regional
managers do not have communication or ways to communicate with the senior managers,
therefore; there are no set ways to present crucial information that need senior managers’
immediate attention. Coupled with their disconnection from the larger corporate strategy, and
acting on their own, the risk level in this section would be 5. Managers working on their own
initiatives put the risk of deviating from the primary strategy, consequently, deviating from the
main organizational goal and objectives.
Recommendations
In regards to the complexity of the business, managers should receive proper training that
would ensure they have a good grip on all the necessary aspect of the business to be managed.
They should be able to understand the business model in general. To handle the velocity of a
business transaction, a computer system that accepts data and provides a necessary report to the
manager should be installed (Gosling, and Naim, 2009, 749). Also, manager to enforce some of
the traditional internal controls such as internal auditing which will give a substantial
performance indication of the company, thus enhance decision making for a better result.
Conclusion
In total, Trading.com Company scores exposure to risk of 42 which indicate high risk
involved and that the business could suffer catastrophically. Out of the possible total of 45,
Trading.com lingers in the dangers zone; and this calls for rapid action to be taken by managers
lest the faces bottlenecking issues. What is more, the company runs a high risk of being thrown

Risk Assessment 9
out of the business market due to poor management. It recommended that manager to strengthen
traditional internal controls and full embrace diagnostic technologic system that would manage
and process their business information.

Risk Assessment 10
Reference
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decisionmaking affect firm performance?.
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Risk Assessment 11
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