Risk Assessment Report Property Millionaires

Risk Assessment Report: Property Millionaires
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Introduction
A risk assessment report seeks to analyze the exposure of businesses to threats. It is conducted to enable the management and ownership of the business to identify areas that need attention. These areas do not necessarily need to be worked on but managers should keep watch to avoid being caught unawares. Usually, when a business is booming, managers can undermine the risks. As a business grows, the risks increase. Therefore, managers should be more watchful when the business is enjoying success. It is ironical that when the business is booming, that is when it is under the greatest danger. These risks come from both the internal and external environment. A risk assessment calculator informs the managers about the level of risk in the business. The results of the analysis then provide insights into what the organization should do. A low-risk figure shows the business is safe but at the same time shows that it is in a comfort zone. Comfort zones are not suitable for business as it means that the business is not taking enough risks. In any industry, businesses have to take risks if they are looking forward to achieving more success. However, high-risk figures should serve as a wakeup call for managers. They should do a thorough analysis of their business to identify areas that pose a risk to the existence of the business. A risk assessment calculator gives risk scores from 1-5 based on the level of risk.

The results are then used to determine the cumulative level of risk in the company. In this essay, this calculator provides an assessment of the level of risk in Property Millionaires.
Pressure points due to growth
Pressure for performance
The pressure for performance is brought about by the ambitiousness of the managers in a business. When a company reaches success, the managers may become confident in their ability and seek to achieve goals that seemed difficult before (Wilson & Bates, 2003). As a result, they may set high goals for the different departments and employees. Due to the fear of jeopardizing their status or compensation in the event they do not achieve these goals, employees of an organization sometimes engage in activities that overstep the ethical standards and company policy (Piercy, 2012). In the case of Property Millionaires, due to the growth of the business, aggressive sales targets have been set for consultants. On top of that, these consultants are not involved in the setting of these targets. There is the risk of these consultants overstepping ethical standards due to this pressure. This is a risk to the company. Here, I would give a 3/5 risk score.
Rate of expansion
Success leads to the expansion of the business. If careful planning and resource allocation are not done, there may be pressure on the business infrastructure. Therefore, when a business starts achieving success, the management should make appropriate changes to the infrastructure such as distribution lines, production facilities, and product lines (Cawsey, Deszca, & Ingols, 2015). In this case, Property Millionaires has been expanding but that growth does not correspond to the infrastructural growth. For instance, the rate of hiring new employees is low. This places the company at risk of not being able to handle the capacity of its business transactions. Here, I give a 4/5 risk score.
Inexperience of key employees
Due to the rapid expansion, the management can lower the employment standards in a bid to get many workers quickly. Inexperience in the workplace can have adverse effects on the company in the long run (Merson, 2011). There is a high probability of mistakes happening in such a scenario. In this case, Property Millionaires have lowered the employment standards for consultants due to the surge in growth. The low level of experience may lead to decline in quality of service and also increase in operational mistakes and this threatens future profitability. Here, I give a 4/5 risk score.
Pressure points due to culture
Rewards for entrepreneurial risk-taking
When a business is enjoying success, the management may become confident in their ability to achieve even more. This can lead them to engage in risky deals that sometimes do not go as expected (Hope, Bunce, ‎and Röösli, 2011). As a result, there may be dishonoring of contracts and customer dissatisfaction. As the entrepreneurship rewards increase, so does the exposure of the company to risk. In this case, there is a likelihood of dishonoring the contracts that Property Millionaires makes with the clients. Customers have voiced their dissatisfaction with how the company handles them after signing up for the seminar. Additionally, Property Millionaires is mainly offering new products to the clients. When the business is dependent on new products that are created by risk-taking employees, it is under a high level of risk. Property Millionaires has been experiencing an increasing frequency in the failure of new seminars showing that they are exposed to a high level of risk. Here, I give a 4/5 risk score.
Executive resistance to bad news
When a business is enjoying success, executives may develop a resistance to bad news. The senior managers have no interest in people who raise doubts about the continuity of excellent performance. They usually want to be surrounded by people who share their pride in the performance of the business. A bearer of bad news can be seen as jealous of the success and is accused of not being a team player (Adhikary, 2002). However, these people are often the ones who offer essential information about actual risks. In this case, the regional managers of Property Millionaires have surrounded themselves with ‘yes’ people. These ‘yes’ people share and celebrate the good news but avoid talking about bad news. This is dangerous as these managers may not see the impending danger. Due to surrounding themselves with people who do not give them bad news, there is a high probability that they may not know about the risks until it is too late. Here, I give a 4/5 risk score.
Level of internal competition
In many organizations, there is a belief that creating competition for promotions, recognition, appraisal, and other rewards can motivate the performance of the employees. Therefore, employees in the organization will be competing against each other and this puts the organization at risk (Stanwick & Stanwick, 2013). The risk occurs due to the decrease in information sharing. Employees will be keeping information to themselves with the intention of using it to secure these promotions and rewards. As a result, information sharing, which is a crucial part of the success of a business, is affected (Sparrow & Cooper, 2012). Additionally, employees are likely to take risks with the intention of being noticed by the management. These risks may not always be rewarding and they can damage the reputation and profitability of the business. In this case, Property Millionaires ranks its consultants by their sales performance. Additionally, the best performing consultants are given special treatment. This is bound to increase the level of internal competition. Ruthlessness may be another result of pitting consultants against each other. Here, I give a 4/5 risk score.
Pressure points due to information management
Transaction complexity and velocity
As a business grows, the complexity of its transactions increases. Also, the velocity of these transactions increases. Information management systems that are inadequate are a risk to the business. If the business expects its old staff to handle the new, complex and huge number of transactions, there is the imminent danger (Annacchino, 2007). In this case, regional managers of Property Millionaires usually do not understand the complex language of the consultation process. For this reason, they are not well informed about the activities of the company. Here, I give a 4/5 risk score.
Gaps in diagnostic performance
When the number of transactions increases, there is a probability that the scrutiny of managers decreases. This means that they may not review all of the transactions as they did before when the business was smaller (Songini & Pistoni, 2015). As a result, some transactions, which may not meet the standards of the business, can slip through without the managers knowing. Additionally, the information systems may not adequately handle the information flow in the organization (Driscoll & Nye, 2014). As a result, managers have limited access to this data. In this case, Property Millionaires is suffering from gaps in diagnostic performance. Managers have limited access to performance data due to the inadequacy and incapacity of the information systems. This is a risk as they do not have information to determine the actual performance of the business. Here, I give a 4/5 risk score.
Degree of decentralized decision making
The growth of business often comes with physical expansion. The management may decide to give local managers autonomy in making decisions. This can be due to the intention to ensure there is more flexibility and faster decision making. Additionally, this autonomy encourages creativity and innovation (Simons, 1999). Also, with this autonomy, managers are motivated and they become more satisfied with their jobs. In this case, the regional managers in Property Millionaires are acting without a sense of the larger corporate strategy. The senior management has also been given a great deal of autonomy and is allowed to develop content independently. Here, I give a 4/5 risk score.
Results
The total score in the ‘Pressure points due to growth’ is 11. In the ‘Pressure points due to culture,’ the score is 12. Finally, in the ‘Pressure points due to information management,’ the total score is 12. The absolute risk score of Property Millionaires is 35. This means that Property Millionaires is in the danger zone. The management should act fast to ensure that these risks do not lead to the crumbling down of the business (Simons, 1999). The management should conduct a thorough evaluation of the business model and determine the best steps to take to get the business out of the danger zone. Actions that can be taken include investing in modern information systems, ensuring that new employees are adequately trained and have the required qualifications, developing channels of information sharing, proper management of internal competition, and proper management of growth.
References
Adhikary, M. (2002). Business economics. New Delhi: Excel Books.
Annacchino, M. A. (2007). The pursuit of new product development: The business development process. Amsterdam: Butterworth-Heinemann.
Cawsey, T. F., Deszca,G., & Ingols, C. Organizational Change: An Action-Oriented Toolkit. Thousand Oaks, California: SAGE Publications.
Driscoll, B., & Nye, P. (2014). Peak business performance under pressure: A Navy ace shows how to make great decisions in the heat of business battles. New York: Allworth Press.
Hope, J., Bunce, P., & RöÖSli, F. (2011). The leader’s dilemma: how to build an empowered and adaptive organization without losing control. Chichester, Jossey-Bass.
Merson, R. (2011). Guide to managing growth: Turning success into even bigger success. Hoboken, N.J: Wiley.
Piercy, N. F. (2012). Market-Led Strategic Change. Abingdon: Routledge.
Simons, R. (1999). How Risky Is Your Company? Harvard Business Review. Retrieved from https://hbr.org/1999/05/how-risky-is-your-company
Songini, L., & Pistoni, A. (2015). Sustainability disclosure: State of the art and new directions. Bingley: Emerald Group Publishing Limited.
Sparrow, P. & Cooper, C. L. (2012). The Employment Relationship: Key Challenges for HR. Abingdon: Routledge.
Stanwick, P. A., & Stanwick, S. D. (2013). Understanding business ethics. Thousand Oaks, Calif: SAGE.
Wilson, P., & Bates, S. (2003). The essential guide to managing small business growth. Chichester: Wiley.