The charity organization has been selling donated products to the middle and low class people within its locality. Most of the operations in the shops are done manually. This leads to some items staying longer than they should in the shops thereby being scrapped. Determination of stocks has also been a problem as some shops are under stocked while others are overstocked. This results into goods being moved from one shop to another which is very costly. This has been attributed to the fact that there is any proper stock management system. The physical space for stocking the items or establishing the shops is becoming more expensive day by day. This has prompted the management to seek for ways of rectifying the situation and boost the profits for the charity organisation so that they can achieve their goals of running the charity. This can be best achieved by implementing electronic commerce (e-commerce).
This will help in stock management thereby decreasing losses that result from poor stock management like overstocking and under-stocking. This can be implemented in the charity’s website so that transactions can be done online. Many organizations are switching to this new form of transacting business activities due to the numerous advantages that come along with it. Some other advantages include: reduced cost of transactions, real time stock management and inquiry is made easier as one doesn’t need to go all the way to the place where the item he/she wants is stocked. E-commerce cannot be successful without the following innovations; supply chain management, online transaction processing, electronic funds transfer, internet marketing, inventory management, electronic data interchange, and the automated data collection systems. E-commerce is only possible for virtual contents however, the physical transportation is done physically and not via the internet or computer networks. (Sandy, 1998) However, e-commerce like any other technology has several disadvantages and risks that come along with it. The risks need to be detected in real time and controlled before they affect the business.
Risks associated with implementing this new technology to the charity organisation include:
i. System breakdown: This can be caused by hardware degradation which may result into the system failing.
ii. Denial of service attacks: This is the use of misguiding messages/false messages to bring a computer system down.
iii. Data leakage: This involves the charity employees leaking data to external partners. This has the effects of unauthorized access to the charity information.
iv. Credit card and payment fraud: This involves hackers who gain access to credit card information. This makes it possible for them to facilitate unauthorised transactions with the cards.
v. Website defacement: This involves degradation of the charity’s website which may later on result into the public image of the charity being destroyed.
vi. Data threats: These usually attack the software or the data being used by the company. They are caused by viruses and or other malicious software gaining access into the system.
The charity organization has to put up the following mechanisms so as to control the risks whenever they happen. The best way to reduce the risks associated with e-commerce is to involve the organization and systems managers into the process of risk analysis. This can be achieved by using The Electronic Commerce Risk Management. The Electronic Commerce Risk Management can identify potential risk events in the early stages and prevent them from occurring in due time.
Some of the ways to counter risks include:
i. Using biometric readers- This involves the verification of the identity of the person through provision of his/her biological data like the fingerprints and the face recognition systems.
ii. Implementing the use of smart cards – This card will store information about the user in the card’s memory. It will be used for verification purposes of the user before any access is granted within the company’s premises.
iii. Using digital wallet – The digital wallet is encryption software which will be used for coding and decoding information to ensure that information can only be available to legitimate users.
iv. Using Luhn formula – It helps in reducing fraud cases of credit cards as information about the credit card which is transmitted over the internet is encrypted using some kind of encrypting algorithm.
Preventing the risks is much easier than dealing with the effects of the risks after they have occurred. The following actions need to be taken into consideration in an attempt to prevent the risks:
i. Preliminary Risk Assessment
This involves organizing for a structured meeting between the system’s managers and the organizations senior managers. This helps in highlighting the key issues that might be facing the organization/business establishment for further analysis. It focuses on the outcomes which are based on omissions, errors and structural weaknesses.
ii. Detailed Risk Assessment
This is a more comprehensive approach to risk assessment. Detailed risk scenarios are developed at this stage. The senior management will then view the scenarios presented and decide whether to approve it or not.
iii. Controls Implementation
This stage also involves the senior management who participated in the preliminary Risk Assessment. They will review the findings of the study and thereafter decide whether it can be implemented or not.
The charity organization has a task to accomplish. Using the e-commerce for running the transactions can be of several advantages but proper risk analysis has to be done so that the risks do not affect the operations of the organization. The advantages of implementing the e-commerce surpass the disadvantages and the risks associated with it. However, if the risks are not properly monitored, they can bring the whole organization down. The process of risk analysis and management is one of the most important things that should be taken care of. Managing risks can not be postponed to a later time. The management has to move in with force and tackle the risks before their effects begin to show. (Baxter, 2010)
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4. Institute of Risk Management/AIRMIC/ALARM (2002) A Risk Management Standard. London: Institute of Risk Management
5. Keith Baxter. Risk Management: Fast Track to Success. Prentice Hall Publishers. 2010