E-Commerce Managing Risk and Control - Coursework Example

Running Head: E-Commerce Name: University: Course: Tutor: Date of Submission: To What extent the word of electronic trading has changed managing risk and control. E-commerce is without doubt on of the greatest advancement in business practice of all times. No one would ever have thought that one day; the physical selling would be substituted by mere online business practices that were made a reality by recent technology. With the technology, businesses were able to expand their markets besides offering enormous information to clients and potential clients on real time basis. In fact, business and business organizations that were quick to adapt to e- commerce were unrivalled in terms of products and service deliveries not to mention that their customer service became more appealing. New online business models came into place and oversaw a turn around on the manner in which operating expenses, especially in the daily running of a business were reduced. As a matter of concern e-commerce was not only related to the internet but other forms of electronic operation like telemarketing that saw the use of telephone become a part of the online selling. According to the evolution of business, especially with the invention of online business practices, many businesses fit into this new innovation blindly without knowing the risks or the compromises that the new invention brought along. An example is most profound with the rise and fall of dot.com types of businesses that were very quick to emerge only for them to disappear with no time. The disappearance of such kind of business models could have been attributed to unavoidable risks that were overlooked by the management of such operations. This rise and fall of the business model made a huge impact on the perception of online business especially on businesses that were having business relations with other business entities. It worth of note that, although many risks have been associate with e-trading and the continual use of modern technology in business,, the same technology is unavoidable if at all business entities want to remain relevant, competitive and to have a future. Thesis Statement: This paper therefore highlights internet risks that have been associated with e-trading and the various ways the business management element has tried to control or rather eliminate such risks while running their businesses. In addition, it is important to acknowledge that e-trading has a lot of potential that if well utilized businesses will benefit not to mention the same benefit will be experienced by customers or buyers who will get products and service at their own convenience. This edifies the reason as to why a risk management policy for each business entity involved in e-commerce should be a matter of priority. A lot of confidence needs to be built on the use of technology and e-commerce if at all this concept is to survive (Skevington, 2008,pp.13-24). The following are some of the risks issues that have continued to exist in e-commerce and which should be managed promptly. Data Threats E-commerce has transformed the transfer of business information flow, its management, storage and retrieval. It was traditionally common that business information was characterized with a lot of paper work that was perceived as red tape and inhibited convenience in business operations. The same information could undergo a lot of stages for unnecessary approval by authorities within the organization structure before they were given a go ahead to the destined business entity. With that aside, the same information or data to be precise would be stored in paper form. However, with the emergence of the internet business information transfer, information flow and storage became easy and the same on data retrieval. From a management perspective, data information flow became easy, convenient, cheap, time saving and many perceived this to be the end to management red tape. However, one thing remained unresolved; data security. From the traditional storage of data file in pare and files, the new technology offered another form of storage; online storage that saw a lot of information being handled by computerized devices that could retrieve file from the internet and as well store them on the internet. Some of these data threats have been possible by computerize software’s that can either be installed into computer system in forma of; spywares, viruses and adware’s. Spywares- spywares are programs that are installed into a computerized system without the consent of the system user. These programs are installed into the system in disguise of software’s or downloadable software’s. Once these software’s are installed the business organizations online data can be retrieved by a mere stroking on a command key. This usually interferes with the normal system especially if the user is using the internet which supplements the running of the software and in so doing spy on the user’s data without the user’s knowledge. It is now upon the users of such systems (online business organizations) to carefully monitor their computerized systems and protect their data from such spywares. There are software’s; spyware detectors that can be used by the information technology unit of business entities to detect and get rid of spywares from the business computer systems. Another hurdle has been getting the spywares detectors from reliable sources and genuine software developers. With e-trading, a lot of fraudsters disguising themselves as software developers have been known to take advantage of business organizations by having an access to their data and using the same data to black mail the business organization or sell the information to business competitors. It is upon the business management to conduct a genuine survey on spyware developers and familiarize themselves on matters regarding spywares especially with the downloadable internet spywares detectors that disguise selves as spywares detectors. Viruses- computer virus is common phenomenon on technology savvy businesses. Viruses are software’s or harmful computer programs that interfere with normal computer systems operations, once they are installed to a system. Just like the normal viruses that are known of causing human diseases, these computer viruses can multiply themselves without any computerized command by the systems user. If the whole computerized system has been divided along the very different organization departments or associates, the whole system is prone to the computer virus infection. This is even made more possible if the whole system has been linked with an internet technology. The viruses are known to exist as executable files, Trojan horses and boot viruses. Once they get into the system, the viruses can facilitate unauthorized opening of documents, emails from strange recipients or senders. These viruses can be prevented by use of antivirus programs, installed to the computers or bough online from antivirus software developers. Adware’s- it is common for an advertisement to pop up when one is surfing the internet. These advertisements pop ups are sometimes can be viruses or spywares in an advertisement disguise. Again, the business management can source software’s that get rid of such advertisement software’s or access information’s of disabling such pop ups through a preset fee. In general data threats can be precisely consist of; Unauthorized access to data information. Unintentional deletion of data or data alteration. These threats can therefore be eliminated by; Sourcing of genuine antivirus software’s. Back up data. Use of effective passwords in the computer systems. Proper training in information technology for people responsible in handling data. Errors by People The magnitude of accuracy in e-commerce is usually expected to be almost 100 percent and an error from any end of the whole business process can be very costly to both the buyer and seller. With an example of the internet and the above discovered data threats, it is almost impossible for humans to make a mistake during the whole process. Some of these processes will need software support, use of links to access these software’s and such. It is now upon the management hire the right qualified staff in handling such data if not least offer training for the existing staff. Lack of proper familiarity with the internet will lead to staff s clicking on adware’s that are existing as viruses, links that will jeopardize the integrity, confidentiality and privacy of information involved in e-trading between the business partners. On the same, a lot of confusion may lead to very important data being lost through deletion, addition or wrong entry of data. These human errors can at least be attributed to the complexity, ambiguity and uncertainty of the process (Kim, Steve, Paula, Eileen & Niels, 2003,pp.56-60). To avert this risk in e-commerce a lot of businesses have committed themselves to improving their e-commerce systems by modern developments and incepting risk management policy in their e-commerce initiative. Technical Failure E-commerce relies on technically built systems that are unpredictable and of which can develop problems at any time. Again, this should be among the top priorities that businesses should be wary of at any time. It would be embarrassing and uneconomical for a business to fully invest in e-commerce model of a business only to continue losing sales on the basis that their online shopping sites have experienced technical problems that will take more than 12 hours to repair. It is significant to remember that e-commerce permits possible thousands of business transactions at the same time. It would not only be an inconvenience to the e-commerce business entities but also to the buyers who already have feigned trust in such kind of businesses. According to Cosmo central (2009), common technical problems that are associated with online buying are likely to be; slow websites, incomplete online purchasing, temporal site shut down, websites crashing down etc. the magnitude to which the effect of the technical problems may cause is unimaginable. Online business offers vast variety and choices for customers and competition is the highest stake in such kind of businesses. In this case, e-commerce traders should be wary of these technical hitches as customer loyalty heavily relies on such conveniences as non-dalliance purchasing process, available items and goods etc. according to information technology experts, these technical problems may arise due to; a problem with database indexing, lack of proper coding of the online shopping cart, overloading of data in the web service host and improper coding of the webs site. The database indexing properly usually leads to slowing of the website speed, while the shopping cart coding problem also slow down the website speed if the indexing is wrong or data entry is enormous for the site to handle at the same time especially if the website is on shared website. It is therefore recommended that, the e-commerce business entity ensure that coding of both databases and shopping cart is precise while the online catalogue is not characterized by heavy images of products as well as limiting of a shopping cart products and services quantity. The technical aspect of the e-commerce possibilities seem to harness the speed and convenience to which promised products and services are delivered and failure in such magnifies the e-commerce risk into another level (David & Julia, 2003,pp.45-60). The more the technical aspects of e-commerce get complicated, the more likely an online business model will lose sales and the vigor in which it previously experienced during it initial stages. Infrastructure failures It is important to first outline the infrastructure that will be probably be involved in such kind of business; e-trading. Some of these infrastructures will include internet servers, internet networks, computers, pertinent business entities etc. if any of these infrastructures fails then the whole process of e-trading is at jeopardy as e-commerce banks on a systematic approach where infrastructures are predetermined by a single objective of either concluding a sale agreement or product delivery. E-trading infrastructures are cheap in terms of maintenance but devastating if not well maintained; their magnitude of failure transcends the physical infrastructures of conventional business models. According to Amjad (2004,pp.78-82) the infrastructural failures in an e-trading business environment can be valuated from a checklist that entails; the infrastructural architecture of the technology networks, the technological equipments involved in the business process, the implementing networks of the process and the data business process applications (databases). From the above checklist, a business is able to develop a risk management model, especially on the e-commerce infrastructures. This risk management model on infrastructures should involve assessment of networks, data security and data reliability. Identify and review the scenarios where the e-commerce infrastructures have been compromised especially on the computer systems, software’s and the causes of these infrastructural failures. On the same note, the information technology units of the e-commerce businesses should project the pattern on which such failures are likely to appear within the e-commerce business process, their effects and ways in which to avoid hefty losses on data and profitability’s. Credit card and payment fraud Credit cards are one of the most common means or terms of payment in e-commerce. Just like the whole idea of e-commerce, the payments involved in such business practice are also electronic. Credit cards have taken this role of transferring money through a credit card that is easy to carry and use anywhere at the buyers convenience. The major risk that is associated with the credit cards in e-commerce is; payment fraud. Credit card have a pin number or a password that should be confidential and only for the card holders knowledge. The moment the password is in the hands of a second or a third party, its usage is at risk. Moreover, people have been conned into revealing their card and password numbers to online fraudsters who a queer way of knowing the account details of the card holder without necessarily stealing the card. This kind of payment fraud can also be traced to fake online businesses and fake buyers who use illegitimate credit cards. With these kinds of frauds, e-commerce is at risk of losing its integrity especially on the hard won confidence of online buyers and trading partners. Malicious attacks from inside or outside your business Malice and office politics are part of any organization that has differing interests and so such is indifferent to online businesses which are run by diverse people. These malice attacks may be also based on the business policies while outside attacks are likely to emanate from the rival competitors who may use a fierce competition campaign. It is upon the e-commerce businesses to be fully aware of such malice attacks, and opt for ways in which to defend themselves from such given into consideration that an online attack is subject to become viral especially if it happens to be about the organizations websites, products or operations. Hacker threats Hacker threats can also be categorized into unauthorized access on an organization system, especially on data and other important information regarding on business plans, marketing strategies and other confidential information. The new invention of cloud computing that has allowed other business to have links of other businesses may be at some time be helpful for an organization that is new to e-commerce business practice, the same to botnet information systems. These systems further exposes the business to data threats and hacker threats as it becomes part of sites that are vulnerable to viral infections and hacking by malicious competitors or individuals. It is upon the management of the online business to carry out a risk assessment on the best way to host their website especially by weighing the risks involved in the botnet computing systems and cloud computing system. Conclusion E-trading is without doubt one of the most beneficial and advantageous progress that the business world has ever achieved, with the benefits ranging from easy and quick payment transactions and vast penetration and market accessibility (Westland, 2002,pp.34). However, from the above risks, it is not also easy to realize these benefits unless measures are put into place to ensure that these risks are assessed, monitored and controlled. An example of such, e-commerce risk model is as below. Fig 1.0 an e-commerce risk model The above model is an exemplary model that online businesses can use to asses the operations risks that are rated high in such kind of business environments, the same on security issues. Reputation risks portray a public expectation from the e-commerce business and from its website while strategic risks emphasize on the business innovativeness and the substituent cost on the strategies executed. On the other hand, liquidity risks can be traced on the manner in which payments are transferred between accounts while legal issues applies to the regulations that are lawful when it comes to online business compared to conventional business models. On the same note, narrowing margins risks are concerned about business profitability’s while outsourcing risks emphasizes on issues of the logic of outsourcing, outsourcing efficacy and costs. References; Kim V. A, Steve E., Paula M. C. Eileen T. & Niels B. A. (2003). Seeking success in ebusiness. New York: Springer books,pp.56-60 David K. & Julia G. (2006). a risk management approach to business continuity: aligning business continuity with corporate governance. Brookfield, CT: Rothstein associates Inc,pp.45-60 Amjad U. (2004). Third generation distributed computing environments. Nge solutions Inc,pp.78-82 Anonymous. (2009). Technical problems with e-commerce sites could ruin your business. Published on www.cosmocentral.com on January 10, 2009. (Retrieved on 13/12/2010). Skevington D. (2008). Guide to science and technology in the USA: a reference guide to science and technology in the United States of America. London: F. Hodgson,pp.13-24 Westland J. C. (1999). Global electronic ecommerce: a theory and case studies. Cambridge, MA: MIT Press,pp.34 http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1075386132&type=RESOURCES.(accessed on 14th Nov). Read More