The risk of an organisation can be defined as the exposure to potential loss that can occur due to various pressure points that affect the organisation culture, functional management and information management. It is important for an organisation to assess the risk that they are exposed to and monitor them from time to time (Bromiley et al., 2015). This report will look into the various pressure points that influence the risk factors of an organisation and will over look and assess the risk level of a company, the Trading.com. The report will implement the Risk Exposure Calculator which will include the pressure points that occur due to growth which will evaluate the pressure for performance, the rate of expansion and inexperienced employees. The second factor in the assessing the risk will include the pressure points due to culture which includes the rewards for risk taking, resistance to bad news and level of internal competition. The third factor taken into consideration will include the pressure points due to information management which includes transaction complexity and velocity, decentralized decision making, the gaps in diagnostic performance and transaction complexity (Power, Ashby and Palermo, 2013). The following section will evaluate all these three factors with respect to the organisation Trading.com and assess its level of risk.
Trading.com is a company offering share investment courses and mentoring services to the common people. The company runs on the philosophy that with the right mindset education and support a common man can also become a successful investor. The founder of the company is Jospe Drake, who incorporated the company three years ago and it developed into a medium scale organisation with around 100 staffs and operations in Sydney, Melbourne, Adelaide and Brisbane. The company has recently seen extensive growth over the last one year due to its extensive sale of the course material and they have been expanding operations and facilities at a rate higher than they could induct new employees. This scenario of the company exposes it to the risk and will analyse its outcome of the same.
The Pressure points due to growth relates to those attributes that arise due to the development and exponential growth of a company. With the increase in growth in business, an organisation experiences several factors that affect the employees over the time. These include the Pressure for performance which increases with the growth of the company. With increase in growth the performance pressure increases. For the case of the Trading.com, the performance pressure is relatively high and score for pressure of performance can be allotted as 4. The rate of expansion is the second attribute in pressure points due to growth. The rate of expansion is pretty high in the last one year for Trading.com and can be rated as 4 in the Risk Exposure Tool (Simons, 2018). The inexperience of the key employees in the organisation are moderate. The risk assessment of this attribute can be rated as 3 for the employees of the Trading.com Company.
The pressure points due to culture refer to stress created due to the operational culture and practices. This is also referred to as the work culture of an organisation and relates to the way the employees perform their business in order to achieve desired ends. The organisational culture reflects the success or failure of an organisation (Brettel et al., 2015). A healthy work culture motivates the employees to perform better, while on the other hand a negative organisational culture can lead to malpractices within the organisation which expose and organisation to long term risks. The pressure points that influence the Risk level are induced by the three major factors that include rewards for taking entrepreneurial risk which refers to the practices that are performed by the employees in order to gain maximum benefit (Edwards and Bowen, 2013). This culture leads to adaption of unhealthy or unethical practices which can expose the organization to high level of risk. Trading.com has policies of rewarding their consultants and employees with rewards if targets are met and a risk value of 4 can be assigned for this aspect. The second attribute in organisational culture that affects the company is the resistance offered by the executive with respect to negative or bad news. The managers of Trading.com hardly respond to bad news and offer resistance to bead news thus the risk factor can be rated as 5 for this factor. The level of competition is very high in Trading.com being their industry. The managers pitch their employees in achieving targets and hence competitiveness is highly ruthless. Internal competition can be rated as 5 for Trading.com
Information management in an organisation relates to the way business informations are circulated, managed and handled. The necessity to manage the business information is important since it allows for the growth of an organisation by keeping a track of its activities and therefore allows opportunities to operate an organisational with effective outcomes. The risk attached to the hidden information is often overlooked by the managers when growth is positive or increasing. The necessity to understand these hidden risks is by far one of the major concerns of a firm. When an organisation is expanding, it involves several transactions, complex in nature and complicated in their presentation. The managers should access this information and evaluate them to understand if discrepancies are involved in them. The process by which information is managed should not be compromised at any level, doing which will only lead to the higher changes of exposure to risks. The three pressure points that increases risk level of an organisation are due to the transaction velocity and complexity of the business. The second point that adds to the exposure to risk is the gaps in diagnostic performance which relates to the exact identification of actual and preferred processes of the organisation and individual performance levels. This also includes the specific suggestions that are aimed to improve individual performances. The third attribute that comes within the purview of the information management is the decentralized decision making which refers to the decision making capacity given to the local managers (Chand, Raj and Shankar, 2014). The proper ascendance of information does not take place and at times the right information does not reach the right person at the right time. This mismanagement of information over a period of time can lead to the huge risk for the organisation. The transaction velocity and complexity for Trading.com has increased to an alarming extent owing to the nature of their business success. They have been expanding at a rate faster than they could hire enough staff to manage them. This would eventually relate the over loading of transactional information, and proper management will be really difficult with inadequate staff. The complexity of the transactions due to the leads and business generated by the consultants will enhance the chance of risk for Tradiing.com. The level of risk assessed for the complexity and velocity of transactions of trading.com can be assessed to be 4. The level of risk generated by the diagnostic performance of the company Trading.com can be evaluated with a score of 5 since the mode of operation and the cascading of information is not even. The local managers are assigned with greater responsibilities and they are allowed to decide on several issues in the local level. At times the information from the consultants is either not passed properly or they are not even communicated to the higher level. The information from the senior managers and the owners are also not communicated in an effected manner for Trading.com. The CEO often decides plans and policies and communicates only when something is to be implemented. The monthly performance reports are also not passed evenly at all the levels and at times are not even maintained properly. This creates discrepancies and therefore the risks due to diagnostic performance are high for Trading.com and the score for this risk factor will be 5. The last pressure point in the decentralized decision making which is highly prevalent in Trading.com. The organisation in order to manage its expansion has allowed decentralized decision making. This has led to the enhancement of the risk that the company is being exposed to. The level of risk for decentralized decision management of the company can be valued for 5. The calculation of the risk using the risk Exposure tool can be thus evaluated from the values assigned to them. The risk assessment tool is attached in appendix.
The Risk Exposure Tool evaluates the risk of Trading.com and values the risk at 39, which is highly alarming and the top management needs to assess the situation and take adequate steps to implement the remedial measures (Fadun, 2013). The risk assessment gives an overview of the situation of an organisation in terms of its organisational growth and sustenance. The three pressure points need to be reviewed by the company and devise effective policies that would bring a change in the organisational structure and mends ways to create effective growth for over a time.
Conclusion
The exposure to risk is a common phenomenon relevant to any organisation. It however should not be underestimated and hence preventive measures should be taken to analyse the amount of risk an organisation is exposed to. Several managers often apply to the levers of control to manage the protruding risk that is eminent in the company. A business is bound to have fluctuations in growth and losses. The success of a company cannot be estimated with its profits generated or with the gigantic growth. The success lies in the substantial growing of an organisation over a time and achieves milestones that would develop the assets of the organisation over time. The Risk Assessment Tool is not an exact measurement of the pertaining risk but enables the managers with an approximation of the scenario which can help them reassess their situation and take steps to mitigate them. The tool enhances the capacity of the managers to understand the loopholes in the organisation, even when there is productive growth.
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