Risk Management in Online Transactions


A Critical Analysis of Risk Management in Online Transactions E-Commerce

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Table of Contents


A critical analysis of risk management in online transactions e-commerce


Online business gradually became popular in the 20th century, leading to the contemporary digital era in the 21st century. Most individuals and companies worldwide rely on technology for online transactions, especially during the Corona Virus pandemic. Online transactions are conveniently fast and involve low labor costs. Online interactions include different spheres in society such as classes, trading, gaming, etc. Risk management is an essential aspect of online companies ensuring efficient network system security (Oliveira et al., 2019). Company risk management policies determine how their customers perceive them as well their market success against their competitors. Most individuals decline to work with some companies with the fear of higher losses than gains. Therefore, risk management policies influence the decision-making of their clients and how extensive their investors are. Concerning the above discussion, the research aims at contributing to company success strategies brought about by effective risk management strategies. The study will also document the impact of risk management on individuals’ decision-making. What are risk management strategies used in e-commerce? How effective is risk management practice in influencing clients’ decisions? How do the risk management strategies compare to customer satisfaction? What aspects in company risk management generate customer satisfaction, and in which way?


Research methods used

  • A survey by examining ways in which some e-commerce firms run.
  • Secondary data analyses research through reading scholarly articles.

Results and discussion

The report compiled helps answer the questions previously asked. Comprehensive coverage of risk management strategies used in e-commerce to cover the risks in chapter 31 of Kahneman’s book is discussed to complete the study. The efficiency of risk management practices in influencing clients’ decisions that unveil score and performance is found in chapter 32. Comparison of risk management strategies concerning customer satisfaction and the reversals in chapter 33, ways that company risk management generates customer satisfaction to expound on frames and realities are also discussed.


Risk Management Strategies Used in E-Commerce

The Magento forum in the modern economy has made electronic marketing the priority for almost all transactions. The platform is a PHP-written open-source e-commerce marketing forum that uses multiple frameworks like symphony and laminas (Bogman & Kerkhoff, 2016). Its source code is on the open software license. The fast-growing rate has forced Magento to spell to its users and transact the risk of online businesses. In addition, the growth rate has called for the development of risk management strategies in e-commerce transactions by business owners.

Among the numerous strategies is understanding the risks to train the staff accordingly. The employers shed light on some of the dangers the firm is likely to come across to their employees (Kahneman et al., 2011). Every worker has to understand such risks to have a hint already whenever they come across them. Once they are theoretically conversant with the dangers, the employee lays down a sound procedure of avoiding them. Every employee must strictly adhere to the set risk management strategies to not deter the company’s aims and goals.

Another strategy is the insularity of information security. Some of the information in e-commerce is the customer database that entails all the transactions like the orders placed and the payments issued cards (Kahneman et al., 2011). Laying down a good strategy to secure such information keeps the hackers away from the firm’s data. A hacker is any authorized computer user that logs into any database to distort information. E-commerce firms ensure security through an experimental setup of a process through which they can place their orders or payments. Such mitigation keeps the hackers at bay.

The proper selection of a merchant service provider and an acquiring bank adds to other strategies. A merchant service provider is an intermediary between the bank, the customer, and your webserver. An acquiring bank is a middleman replica whenever customers pay their transactions using their credit cards (Kahneman et al., 2011). Good merchant service providers and acquiring banks have well set up risk management strategies too. Best selection means good customer protection, customer loyalty, and minimized worrying and mistrust issues.

Effective display policy creation. The fact that the transactions are online means that the company market most merchandise via the same platform cards (Kahneman et al., 2011). While displaying the goods to be sold on the server website, e-commerce ensures a definite list of the customers’ privacy, the refund policies the seller offers, the shipping, and the return. Perfect display policies ensure customer satisfaction whenever they decide to shop via your platform. It also affirms the customer with quality products, and in case they don’t get what they anticipated, there is always a refund option.

The last but not least risk management strategy employed in e-commerce is the collective effort to minimize losses. Collection effort refers to assembling similar products (Kahneman et al., 2011). The same case applies to e-commerce. Similar effects are placed together by the company marketers to ease the shopping process. E-commerce firms control chargeback types as a risk management strategy. The strategy aims at having a well-designed collection system that recovers firm chargeback losses that are unwarranted.

Effectiveness of Risk Management Practices in Influencing Clients Decisions

In electronic commerce, a client is any person that visits the firm’s website to request certain services. The client might come to the server searching for marketing decisions, facilities, customer service, and even information technology (Vadwala et al., 2017). Any client who wants to create a long-term partnership or professional service with the server intrinsically analyses the server’s risk management strategies. Effective risk management practices influence clients’ decisions positively. An impressed client might opt for the webserver if they feel like all their risks are well covered.

A server that has well-trained staff on the electronic commerce risks attracts numerous clients. Any client choosing a web server would want to work with well-informed and trained personnel (Kahneman et al., 2011). To accrue many clients and grow their marketing web, companies should equip their workers with knowledge about their risks when dealing with different clients’ products. Such measures will attract many clients and make them choose your server for e-commerce, including other professional services. All the staff should also follow the set procedures to aid the firm in reaching its goals.

Any person or company that seeks for professional server always thinks of their information security. No client can partner with a web with poor information management and is prone to hackers (Kahneman et al., 2011). Effective information security strategy assures the client of a good watch out on their databases. Employment of good data management skilled workers can help nest such clients. A webserver with data scientists who check the server to maintain a secure and proficient way to complete their transactions attracts more clients.

Clients also prioritize the way their liquid cash will be flowing. Acquiring banks and merchant service providers partner with different web servers to help in credit card and cash transactions (Kahneman et al., 2011). A perfect selection of a merchant service provider and an acquiring bank assurer the clients of security of their customers, and even their safety from fraud money launders. E-commerce web servers should always ensure that they deal with standard acquiring banks and merchant providers. Such a measure is also effective in determining clients’ decisions.

Perfect display policies mean customer satisfaction which many clients depend on for the growth of their businesses. Clients check the policies made to compare whether they can work with refundable, return, and shipping policies that the web server provides (Kahneman et al., 2011). Excellent and effective policies mean numerous clients and the exponential growth of the e-commerce marketing server. Clients will also want to ensure customers’ privacy and convenience, achieved through an effective display policy. In general, with an effective policy comes a staggering number of a client and the propensity of the e-commerce web server.

It is so definite that no client would want to create losses through losing customers intentionally. A reasonable collection effort keeps all this in check by grouping all the goods at one point, like a boutique, electronics, and even furniture (Kahneman et al., 2011). A customer doesnt have to go checking in another website for other items. A good categorization of the merchandise makes the customer shop for all they want in one web server. These are the wants any client seeking any professional marketing partnership with an e-commerce web server would look. The server should set a collection effort that is both appealing to the client and the customer.

Comparison of risk management strategies to customer satisfaction.

A customer is a person who buys goods and services from a company. In this context, the customer buys goods from different clients via a server (Vadwala et al., 2017). A server is an application that channels various services to other customers. The application is on a web server. Good risk management strategies can help achieve customer satisfaction with the Web-server.

Assuring a customer that their information is safe when they are making transactions is one thing, but the actualization of the claim can create customers loyalty or destroy it. A customer should be confident that whenever they feed their credit information and even their location for the deliveries, their security is not threatened (Kahneman, et al., 2011). Such server assurance is achievable if the Web-server has an impeccable security system with privacy policies. If the customers are satisfied with the server’s security system, they shop confidently and worry less about the information they submit to the server. A good selection of an acquiring bank and merchandise services provider ensures customer satisfaction. The web server should partner with widespread and trusted providers for credit cards. If the Web-server uses the same providers like the ones the customers use, it is easy to solve transaction issues that might arise in between the transaction periods. Refunding is made easy and transactional costs, with minimal transaction costs when customers and the webserver use the same merchandise provider. The customers are satisfied with such services, become loyal and even ambassadors of the server brand.

Customers prefer using a single online shopping cat when shopping instead of moving from one e-commerce web provider to another. A reasonable collection effort minimizes the loss of impatient customers, reducing sales (Kahneman, et al., 2011). Any good collection should have definite and well-arranged different classes but under the same web server. For instance, a shopper should not find it hard to allocate either groceries, electronics, dressings, furniture, kitchen utensils, etc., on an e-commerce web server. The firm has to attract many clients and merchandise providers to stocked well with the customers’ wants. Customers also prefer being kept abreast of all the policies that the client offers via the webserver. A definite list of the privacy policies, the shipping costs and duration, the refunds, and return policies the seller offers made available without a struggle to reach them sheds light on what the customer should expect when the transaction doesn’t go through as expected. All such risk management strategies will ensure customer satisfaction, while violation of them destroys customer relationships.

How Aspects in company risk management generate customer satisfaction

A company is an act of partnership with others for commercial purposes in the electronic commerce context. Customers, as defined earlier, are individuals that purchase goods from selling companies (Kiseleva et al., 2016). An aspect is a particular way in which a company shows the risk management strategies at check. Customer satisfaction is the rate at which a customer appreciates the services and offers they receive from a combustion company. Some companies adopt close monitoring of customer relationships to develop the best aspects by improvising the products and services they offer. The information that helps the companies draft good customer satisfaction aspects include using customer ratings and surveys, all availed on the e-commerce web server.

Companies employe well-experienced data scientists. The data scientists collect the raw data from the customer and sell databases and convert it into useful information to come up with the customer wants predictions based on the trend before they even ask for it (Kahneman, et al., 2011). such an Upwork and improvement of the services and products offered to the customers by the company generate immense customer satisfaction. Furthermore, the data scientist also keeps the web server’s system secure from violation by hackers and any other privacy breach policies. Thus, the safety of the customer data maintains their satisfaction and loyalty to the web server as an online shopping mall.

Another aspect emulated by various e-commerce companies is selecting the right merchandise provider and acquiring a bank. The fact that e-commerce occurs online means that most of the payment transactions are done online or by credit cards (Kahneman et al., 2011). Acquiring a good merchandise provider and bank helps the customers have an easy time making payments and following up their transaction deductions. Therefore, companies select a popular and easy-to-use service provider to ease the payment procedure, cut on transaction costs and assure customers’ security via the banks they have entrusted their funds. Such an aspect also keeps customers and leaves them with satisfaction whenever they shop.


The companies always have well laid down effective display policies with a good merchandise collection to satisfy customers. When the privacy, shipping, privacy, and even refundable policies are made open on the webserver, the customer serves with the confidence of getting the products they want eventually (Kahneman, et al., 2011). Getting almost everything they want on the web boosts the sales and retains the customers. The companies ensure this by perfect stocking their web through a partnership with numerous clients and arranging different products according to their class. Identifying the risk management strategies and their actualization, finding out how to make them effective, and satisfying the customer to finally draw the perfect aspects have made the e-commerce sector boom, and it is still thriving.



Bogman, R., & Kerkhoff, V. (2016).Magento 2 Cookbook. Packt Publishing Ltd.

Kahneman, D. Farrar, Straus and Giroux. Thinking fast and slow, 2011.

Kiseleva, E. M., Nekrasova, M. L., Mayorova, M. A., Rudenko, M. N., & Kankhva, V. S. (2016). The theory and practice of customer loyalty management and customer focus in the enterprise activity.International Review of Management and Marketing,6(6S)

Oliveira, K., Mxas, M., Meirio, M., & Drumond, G. (2019). Critical success factors associated with the implementation of enterprise risk management.Journal of Risk Research,22(8), 1004-1019.

Vadwala, A. Y., & Vadwala, M. M. S. (2017). E-Commerce: Merits and Demerits A Review Paper.International Journal of Trend in Scientific Research and Development,1(4), 117-120.

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