SMU

ASSIGNMENT

SEMESTER – 4

MI0039

e-COMMERCE

Set-1

Q.1. Explain the framework of e-Commerce in detail.

Answer:-

Electronic Commerce FrameworkA framework can be defined as a structure for supporting or attaching something else, particularly a support that is used as the foundation for something being created. Hence, an e-commerce framework comprises the set of infrastructure required for carrying out the e-commerce business. This set of infrastructure typically includes the network requirements and the different software applications that are for e-commerce.

The e-commerce vision summarised above assumes a series of essential infrastructure services and values steady with a broad architectural framework. This framework must allow flexibility, interoperability and directness necessary for the successful development of electronic commerce. The e-commerce framework offers a set of options to the customers. Most of the electronic commerce plans have different strategies for security and privacy, their skill to deal with the payments, and their usability to different transactions. They also vary in their business models. Such variations promote innovation and allows for supplier and customer options. But yet, you need a broad framework to gain wide acceptance. This includes the following requirements and peculiarities of carrying out various business forms in this upcoming electronic environment.

Interoperability: Electronic commerce is based on a common set of required services and standards that allow interoperability. Service providers and application designers use these services and standards as building blocks. They achieve the goals and objectives of e-commerce by combining, enhancing and customising these building blocks as per the requirements.

Maximum flexibility for innovation: The innovation in e-commerce will grow and be established in ways that are impossible to visualise. This will result in evolution of new services and businesses. We can already see that many electronic marketplaces are giving rise to new openings for new services and businesses. Existing services and products will be specified and adapted. Hence, the electronic commerce framework plays a vital part in adapting the changes and then later dealing with the new applications.

Information-intensive products: It is observed that the most important set of products that are sold through e-commerce are the pure information products. For example: electronic journals, catalogues, videos, interactive video games, software programs, electronic coupons, and so on. They also include electronic keys to cars, hotel rooms, storage sections, and airport boarding gates. Some of these products can be designed or modified by a customer. For example, customers want their own selection of articles to be attached in an electronic book, or modify their own clothing designs. This capability calls for a customer-driven activity – a design phase, to the purchase cycle. Hence, it is necessary to have all the activities in the process of the transaction – designing, customising, ordering, billing, payment and distribution tightly integrated and happening simultaneously.

New revenue collecting techniques: We already know about the traditional techniques of revenue collection, for example, payment upon receipt, advance payment, and so on. At present, electronic commerce supports more improved methods of revenue collection. For example, an

information product service provider will allocate the product broadly and then charge on a usage basis — which means charging the customer only when the information is used. This information can be a software program, a digital record, or an electronic key used to open and start a rental car.

Meterware is a new strategy implemented in recording and billing customers constantly depending on their product usage. Along with Meterware, electronic cash and cheques also help in gaining new customers and sharing products.

Legacy systems: The legacy systems that are prevailing in electronic commerce field include mainframe-based agreement, paper cheques, and payment systems, and so on. An electronic commerce infrastructure gains success only when it allows the user to easily shift from traditional systems to innovative, electronic systems, and applications and processes.

Transaction devices: e-Commerce dealings include different kinds of legacy and recently formed devices, media, and systems over which transactions take place. Hence, it is necessary that e-commerce adapts the technologies and devices required for reaching and maintaining the mass market.

We can conclude that an electronic commerce framework developed with all of these needs and considerations in mind will form a strong basis for an extremely useful and effective electronic commerce infrastructure.

Selecting the best e-commerce frameworkDeciding on the best e-commerce framework is one of the major challenges for any organisation. The framework should be selected based on the three evaluation points:

· Features.

· Requirements.

· Luxuries.

Figure 1.1 explains the three evaluation points of e-commerce framework.

Figure 1.1: Three Evaluation Points of e-Commerce Framework

Features are those elements of the framework that make it more prominent and clear from other offerings.

Requirements are the basic requirements of the framework that allow it to do its work. If one among these is lost, then it becomes difficult to use a particular framework, even with the presence of any other features.

Luxuries are the components whose presence is not so important, but they are required to make the case for a framework that comes at a bonus price. The luxury components add something extra to the system to make it worthy of the premium price. The three important factors to look for in any e-commerce framework are:

· Template management.

· Core framework functionality.

· Search engine features.

The framework should be adaptable in order to be able to cope with future evolution of the site and market. At the same time, it should be able to support the existing business and make it as easy as possible.

You cannot create content that will be suitable for submission to search engines, unless you achieve good integration with search engine optimisation functions. Failing to do so will lead to your site creator spending considerable time preparing submission pages instead of making use of that valuable time for extending the site.

So long as you can balance between the cost and the benefits, it is worth paying the extra amount to have a framework that saves you from all that work involved in maintaining the infrastructure and processing payments. The end result is profitability, as expensive manual work is removed from the process.

Electronic commerce and media convergenceBy now you must be familiar with the e-commerce framework. Let us now discuss the role of media convergence in e-commerce.

Media Convergence[3] is a process of interlinking of computing and information technology organisations, telecommunication networks, and content providers from various media. These media include journals, newspapers, music, television, radio, and entertainment software. Media convergence conveys jointly the “three Cs” and they are computing, communications, and content.Convergence happens at two major levels:

1. Technologies: Creative content is transformed into industry-related digital forms for delivery. This is done via broadband or wireless networks to exhibit on various computer or computer-

related devices and also on cellular telephones to personal digital assistants (PDAs) to digital video recorders (DVRs).

2. Industries: Companies that are spread all over the business spectrum starting from media to telecommunications to technology, combine or create strategic agreements. The purpose of these alliances is to expand new business models that can yield profit from the emerging customer expectations of availability of content.

We all are aware that there is a rapid growth with respect to usage of electronic applications and the internet and people, all over the world, have entered the digital age because of technological development. Most of the media-related organisations are experimenting with new openings and concerns – afforded by what is termed as "convergence". The act of combining together of different media and integrating new personalised services is both inspiring and overpowering.

The implementation of high-quality computers, changing to digital platforms, and formation of high-speed computer networks has helped us with new ways of doing things. The old explanations that provided division between TV, Radio, Cable, Newspapers, and Films are gone forever. During 1990’s, there was evolution of ownership convergence which resulted in creation of media-based multinational companies. For example, Disney, Viacom, Sony, and so on. From the customer’s perspective, the Internet has also changed our favourite delivery systems, which include newspapers that provide video and TV that offer interactive conversations, and radio that offers web-cams.

Media convergence has a major part to play in the field of e-commerce and information technology. Media convergence is particularly a blending of television, personal computer, and telecommunications. This helps in providing a high-speed Internet access, traditional television programs and interactive services in a single box. The convergence at a technological level will facilitate audio, video, and data to be conveyed to customers using a single pipeline. This pipeline may be in the form of wire which could be cable or DSL, or may be wireless. This will help the customers to not only access the Internet from a single box, but also access high-speed networks through various access points including TVs, PCs, mobile phones and other mobile devices, public booth, and home appliances.

Q.2. List the advantages and disadvantages of e-Commerce.

Answer:-

Advantages

With the Internet acting as an emerging technology, e-commerce is the most important aspect that has gained more prominence in the recent times. Electronic commerce involves execution of business via the Internet with the help of computers that are connected to each other as a network. In simple words, e-commerce is a process of purchasing and selling of products and services and funds transfer via digital interactions.

The advantages of e-commerce include:

· e-Commerce helps people to run their businesses without any hurdles of time, distance, or place. The users can access the internet at any time, be it day or night to carry out online shopping.

· The cost-of-sale for online shopping done through a web site is less as compared to the shopping done via traditional means (retail, paper based). This is because there is no face-to-face human interaction during the on-line electronic purchase process. Also, online shopping is a faster and convenient mode of shopping.

· e-Commerce is the cheapest means of performing business. Operational advantages of e-commerce consist of reducing both the time and employees necessary for all the business procedures.

· e-Commerce is especially ideal for niche products. Customers for such products are usually few, but in the vast market place, that is the Internet, even niche products could generate considerable volume of sales.

- e-Commerce increases the sales income to the business.

- It helps in easy tracking of the customers’ segments. Immediate worldwide sales existence in quick time.

- It facilitates in opening the shop in any part of the world, independent of geographical locations.

- It also aids in reducing customer support expenses through e-mail marketing and customary or traditional newssheet.

- It also facilitates the customers to easily purchase their products via various payment accesses.

- It helps in developing more shopping carts.

· e-Commerce provides a lot of physical benefits from the customer’s viewpoint by:

- Reducing customer’s sorting out time

- Making better customer decisions

- Spending less time in resolving bills, demands, and order differences

- Increasing opportunities for purchasing substitute products.

DisadvantagesIn the previous section, we discussed about some advantages of e-commerce. Let us now discuss about disadvantages of e-commerce.

· In e-commerce, anybody can easily start the business, irrespective of the fact if it is good or bad. Also, there are many bad sites wherein customer’s money is wasted.

· e-Commerce cannot provide guarantee of product quality.

· Mechanical breakdowns can cause unchangeable outcomes on the total processes.

· Customer reliability is very crucial here, because there is less chance of direct customer to company interactions in e-commerce.

· e-Commerce sites, services, and payment accesses are always in danger as there are many hackers looking for opportunities to get the access.

· Some customers are uncertain of buying products online. For example, online furniture businesses have been a failure as the customers would like to find the comfort level of a costly item such as a sofa before buying it.

· Some people consider shopping as a social experience. For example, some people prefer to go to a shopping mall with family and friends and purchase products rather than online shopping – hence they may not like to buy online.

· Things like food, jewellery, antique items and so on. can never be sold with e-commerce technologies as it is impossible to check them from remove locations.

· Many organisations face problems with hiring and maintaining employees with the designing, technological, and business process skills necessary to create a successful e-commerce presence.

· It is impossible to totally remove frauds in the e-commerce transactions.

· Cyber laws are not correctly followed strictly, and the existing ones are not clearly defined in e-commerce.

· The most important disadvantage of e-commerce is shipping, as it takes several days to deliver physical products all over the world.

· Shipping Costs More: The more the weight of the product, the more will be the cost for shipping it.

· Doubts and Fears: Some people are unaware of the awesomeness of online shopping. They are also afraid of online shopping, as they have many doubts in their mind like if the store is dependable or if the product they buy is of good quality.

· Inability to feel the physical: There is no opportunity provided in online shopping to touch or feel the product. Hence, customers feel that purchasing products like apparels or furniture online can be sometimes risky.

Q.3. Prepare a scenario on the organization having shopping cart facility showing the advantages and disadvantages of having shopping cart facility.

Answer:-

Commerce softwareThe best example for e-commerce software is shopping cart software. Shopping cart acts as a major factor that helps in distinguishing online and offline shopping. A shopping cart is the major essential component for online shopping. It is a tool that facilitates your customers to purchase your online products. Understanding and respecting the value of money and time of your customers is the major requirement in creating shopping cart software. Hence, it is necessary that you pay a special attention in setting up e-commerce shopping cart software that is cost effective and that is capable of facing the competitive e-commerce market. The shopping cart software must include the following features:

· Shopping cart made must include lesser production time and faster delivery.

· Easily customisable shopping cart software and also cost reducing that helps in e-commerce shopping cart software improvement.

· No compromise on product quality in negotiation to have cost-efficient e-commerce software within specific time.

· Preserving online store or e-store with just one click log in validation.

· Security of your site must be totally vaulted by Form Authentication and Authorisation.

· Easy updates of the software when required.

The need for efficient shopping cart software has become prominent because of increasing competition and changing market trends. A successful e-commerce solution usually has more appealing and available features. You must be very thoughtful about budget and also business requirements. Hence, an exciting and reasonable range of e-commerce solutions must be developed that helps in gaining the desired productivity, appealing customer service, reducing overheads, and profits.

There is a wide variety of e-commerce solutions available, which is used to build every store that is imaginable, starting from a small boutique to an online mall.

The process of e-commerce solution includes the following phases:

· Good interaction with your new visitors and regular customers.

· Unbeaten advertising of your products.

· Successful and safe process of business transactions.

· Reduced operational expenses.

· Promotion of your company’s brand.

A quick construction and successful use of database-driven storefronts is the major step in developing an e-commerce solution.

Due to recently advancing technologies and vast choice of capabilities, an e-commerce solution is used to create an interactive e-commerce web site and a communicating store for all businesses, starting from a small store to a huge online mall.

Q.4. Give examples for different models of ecommerce and explain what is the benefit of that model in your example.

Answer: -

Business ModelsLet us now discuss the various business models that have emerged since the birth of e-commerce.

Introduction to business modelsA business model can be defined as the particular way in which a business organisation ensures that it generates income, one that includes the choice of offerings, strategies, infrastructure, organisational structures, trading practices, and operational processes and policies.[1]Developments in computing technology and communication systems have not only created many new business opportunities, but they have also created new ways of doing business. Now, let us discuss the most common business models in e-commerce.The merchant

A merchant is a dealer of goods and services. The merchant provides the product information on a website and he also gives an online ordering mechanism. Consumers can select the products which they want to buy and place an order. The product price is either fixed or negotiable and the customer can either collect the ordered products from the shop or get it delivered. Infact, the merchant operates in almost the same way as a traditional ‘brick-and-mortar’ shop-owner. This business model is most appropriate for dealing in physical goods and services such as books, computers or a pizza delivery service. The only advantage in this model is that the merchant can directly reach the end users and sell to them without engaging wholesalers or retailers.

Click-and-mortar merchants

Click-and-mortar shops combine a website with a physical store. The advantage with this model is that they have a physical store to promote the website. In this model, consumers can return unwanted or defective products simply by visiting the store’s website instead of mailing it to a web site operator.

Build to order merchants

Under this model, customers have the advantage of buying goods or products that are made to order. Build to order merchants not only offer pre-manufactured or developed products for sale, but they also offer customisation of products according to the requirements of the customers. Customers can specify the features and benefits of the products that they require and the product is assembled individually and shipped to the customer. This model is best suited for electronic and computer products, which can be customised to requirements.

The service providerFor some services, like a pizza delivery service, where a pay-per-item type of payment is followed, the merchant model is quite appropriate. However, many Internet-based services cannot easily be offered this way. This is because, quite often, it is difficult to define the

"product" that is sold, or to set a price for this product, as they are information based. For example, a news site offering the service of access to its archive, might find it difficult to set a proper price for its services. To overcome this problem, e-commerce marketers offer advertising-based access to their service. This way, they do not charge the end customers, but recover the costs through revenue from the advertisers. However, this strategy does not seem to be very popular, as only very few advertisement-driven sites are able to earn sufficient income.

Subscription-based access

Under this model, businesses provide subscription-based access to their service. A user usually pays a fixed amount per month or year and in return gets unlimited access to the service. One more option would be to pay a monthly base fee and pay a surcharge for all access beyond a certain limit. This model is most suitable for services like databases with articles, news, and patents and online games or adult websites. However, this model has not proved to be profitable, as users find their own ways to access the content without paying the subscription. To overcome this problem, certain service providers make only some portions of the articles available for preview. The customers get to read the complete articles only after payment of the necessary charges.

Prepaid access

In this scheme, after paying certain amount of money users get access to the service for certain amount of time. After the amount is spent, the user has to renew or prepay again for further access. The best example for this business model is usage of smart cards.

The brokerBrokers create markets by bringing buyers and sellers together and helping them in transactions. Brokers charge for every transaction, usually as a percentage of the price of the transaction. Examples are classified ads, group buying and bounties.

The sales representatives

Sales representative usually works on a basis of commission that for selling each item they take commission from producer. On the web, this model is known as affiliate programs or referral fees. In this someone creates a website on some specific topic and adds links to products on a retailer site which are related to the topic, so that the visitors can buy those products. For example, a music reviewer can add a link in a review to an online music store where the users get an authority to order the CD being reviewed. If the user likes the review then he can follow the link and buy the CD then the retailer pays a commission to the reviewer for referring the site.

Anyone who can build a website can link to a product and if everything goes well, then they can make money. This model describes the popularity and usage of the World-Wide Web.

The advertiser

Advertising driven sites are one of the key foundations of e-commerce. The principle behind this is simple and well known. A site gives free access to some products and shows advertisements

on every page. When the user clicks on advertisement an advertisement page appears. The advertiser has to pay the site operator for advertising the product.

Targeted advertising

We all know that an advertisement on the site will get high exposure because those advertisements are targeted to the site visitors. While advertising on the net, it is possible to target the advertisement to the purpose of the program – for example, football games can show billboards in the game to give a look of the real playing field. The site operator earns more money by placing targeted advertisements.

Free access

Let us try to understand this by looking into some examples below:

· Free web space providers usually provide advertising banners at the top or bottom of the users’ sites or as a separate, pop-up window.

· Free Internet access providers show advertisements on the starting page so that the user can have a look at the advertisements when they browse something or when they go online. Advertisements and electronic greeting cards are also sent with a personal message.

From the above examples it is clear that in this model the users are given access to something for free. And with this free access product, shops or sites are also advertised.

The auction roomThis model follows the guidelines followed in an auction sale – the only difference being that the auction is carried on online. There are basically two types of auctions – open auction and reverse auction.

Open auction: In this, the product is repeatedly bid by the participants. The participant who places the highest bid is awarded the product. Through networks such as the internet, it is possible for many bidders to participate at the same time in one auction.

The participants of an online auction have to enter an initial bid, an amount with which to increase the bid and a maximum amount. Whenever some other participant places a higher bid, the system then automatically raises the bid with the indicated amount until any of the bidders have won the auction.

Reverse auctions: In this, the price is initially set at a very high level and the price is dropped at regular intervals. Participants can bid the price at which they want to buy and should also know the fact that there may be chances of bidding by someone else at a higher price.

This model is well known for bidding for high-priced items like automobiles or airline tickets.

The virtual mall

A virtual mall is a site that hosts many retailers, service providers, agents and other businesses. The virtual mall operator usually charges a fee for managing and maintaining the retailers’ shop and for including him in the site-wide inventory. Additionally, the virtual mall operator may also charge a fee for every transaction the seller performs. Virtual malls can operate within the framework of a larger site, such as a portal. We will be discussing about the portals in the next sub section.

The virtual mall can act as a mediator between individual customer and the retailer, for example guaranteeing the full refund if a merchant is unable to deliver the product on time.

The virtual communityA virtual community is a site which has a gathered group of users who all have interest on a common topic and who work together and share their knowledge. Users feel highly loyal to the site and always visit the site as this site is created because of their interest. This offers possibilities for advertising.

A specialised type of virtual community is the knowledge network or expert site, where people, layman and expert, share their expertise and experiences[2]. In these sites, users can get their questions answered and they can even raise the topics for discussion. Example of this type of community may be Usenet newsgroups.A simple method to monitor a virtual community is to register for free access to the website. This allows inter-session tracking of customers’ site usage patterns and thus produces data of higher value in targeted advertising promotions. Registration can be made more attractive and interesting by giving limited access to unregistered users and by allowing the registered users to modify the site after registration or by allowing them to participate in chat or message boards.

The infomediary

An infomediary collects, analyses and sells information on customers and their buying behaviour to other producers who want to know about these customers. Infomediary usually offers something free for customers such as free internet access or free web access. This is very useful as this allows the infomediary to control and observe the user’s online activities. The information which is collected by the infomediary is very important for marketing purposes. Usually an infomediary makes money with an advertising-based model, in which the advertisements are established by the information that the infomediary has gathered.

The infomediary model is helpful when it is used together with a virtual community model or virtual mall, as these models offer the ability to collect essential information.

Q.5. Write short notes on a. False and malicious sites

b. Stealing visitor’s credit card information

c. Stealing customer’s data from selling agent and internet service providers

d. The use of cookies

Answer:-

a) False or malicious web sites

The basic idea behind building the false or malicious web sites are for stealing visitors’ IDs and passwords, stealing credit card information, spying on a visitor’s hard drive, uploading files from a visitor’s hard drive and so on.

Users should be careful from these kinds of websites and users should never reveal their personal information like phone numbers, address and so on, to any such kind of websites. Users should never reveal their credit or debit card numbers, login IDs, passwords and other information.

b) Stealing visitor’s credit card information

Malicious web sites may also be built and temporarily termed as legal businesses for the purpose of stealing visitor’s credit card information. We can explain this with an example – consider a malicious web site which is built to sell and deliver a gift to anywhere in India on Diwali. However, such sites vanish suddenly, and this is identified only after Diwali, with no clue to where to find the site.

Such kinds of websites are just built to steal the visitor’s credit card information. Setting up such false Web sites to cheat users into passing along vital information like passwords or credit card numbers is called spoofing.

c) Stealing customer data from selling agents and internet service providers

Most of the customers who purchase goods and services on internet pay through their credit cards or cyber cash. Such customers also need to take the support of their internet service providers for accessing the internet. The credit card information is stored by the internet service provider and selling agents and many times hackers are successful in breaking into the systems of selling agents and internet service providers and obtain the information on customers’ credit cards.

d) The use of cookies

The use of cookies to get user information is a threat to the privacy of users. Cookies are pieces of information that a web site collects and transfers to a visitor’s hard drive for record keeping purposes[1]. Java Script programs related with web sites record information revealed by a visitor on request by the web browser. When a visitor visits any false or malicious websites for the first

time, many web sites ask visitors to register themselves with the web site and when the visitors fill the information, it is recorded in a text (.txt) file along with a registration number assigned by the site. This file is stored on the visitor’s hard drive. The Web site server also stores the registration number and some other information such as the user ID and password if the user gives all this information. When the user visits the site again and again, the cookies record the details on the web links examined or clicked on into the server.Based on the web browser used, the cookies may be placed in a single file for different websites. Cookies cannot be used for life long. Depending upon the objectives of the website, cookies are assigned the expiration dates which may be of very short period or very long period.

Recent versions of web browsers are designed in such a way that the user gets the authority to accept or reject the cookies. This is done in order to provide privacy to the users. In the recent versions users also have the authority to edit a cookie file to remove the cookies, so that the user can visit web sites without any fear.

Q.6. Describe the risk management paradigm in brief.

Answer:-

Risk Management Paradigm

In the previous section, we discussed about the disaster recovery plan. In this section, let us discuss about the risk management paradigm.

APRA Insight (2001) identifies that e-commerce poses a number of potential risks like operational risks, reputation risks, outsourcing risks, strategic risks, legal risks, increased liquidity risks, and narrowing of margins as shown in the figure 8.1[7]

e-Commerce is highly vulnerable to operational risks, as it is dependent on the system’s reliability and integrity. Hence, security raises significant concerns. We all know that the web is public, and anything published is technically accessible to everyone.

The public expects that a website should always be accessible 24X7 – which can lead to reputation risks. While there are many benefits from outsourcing, trust on third parties for provisions of services, products and infrastructure also increases the risk.

Strategic risk arises from the rapidity of innovation in e-commerce and the considerable costs included in new technologies.

Figure 8.1 explains the different dimensions of risk in e-commerce system development.

Figure 8.1: Different dimensions of risk in e-Commerce system development

Increased liquidity risk may arise during transfer of funds between accounts and institutions rapidly resulting in a virtual bank that runs fund transfers. The openness of the internet creates a

problem in which, customers can easily compare products and services. Most of the risks are applicable to all organisations, which conduct e-commerce using a website.

This dimension of risk model is used to asses the perceptual differences in key stakeholders in relation to risk in e-commerce systems.[8]

Risk assessmentBy now you must be familiar with the risk assessment as we had discussed it previously under the key components of risk management section.

Risk assessment has become a critical task in risk management. Most of the organisations face increased levels of risk almost everyday. These risks may occur from software vulnerabilities hidden in the company’s business technology systems, hackers and cyber crooks who try to steal confidential information. Hence, risk assessment is essential in all organisations and especially in organisations that conduct e-commerce business.Risks can be assessed through the following simple equation:

Risk = Value of the asset x severity of the vulnerability x likelihood of an attack.

In the above equation, a weighting of 1-10 can be provided for each risk factor. It is easy to arrive at an aggregate security risk assessment for any asset by multiplying the factors.

To explain this, let us take an everyday example. Assume that we have an e-commerce server that performs 50 percent of all customer transactions for the organisation – it is very easy to exploit vulnerability.

Therefore, e-commerce server risk = 10 (Value of the asset) x 10 (Severity of the vulnerability) x 10 (likelihood of an attack).

In the above example, the e-commerce server risk is 1000, which is the highest security risk assessment possible. The company can then structure its security risk management policies accordingly, by allotting more resources to overcome this risk.

Control activitiesIn this section, let us discuss about the control activities of risk management in e-commerce.

Control activities in e-commerce are the rules and regulations, which assist in guaranteeing that the orders of the management are satisfactorily carried out. e-commerce risk and control activities are complex and evolving.

Control activities assure that the risk management plans are still valid and they are being carried out well. The project team should always make sure that the assumptions are still valid.

The project team must review the risks and probability for accuracy of all the e-commerce businesses. The project manager must also review the actual project plan to find out whether the original plan has been altered by hackers or not. At this point, they will be tracking the project status or progress and they also verify whether it has been hacked.

The role of internal control in risk managementTechnology has evolved in such a way that companies have started e-commerce websites through the internet to sell their products and services to customers and other businesses. e-Commerce business is a new form of business, which is prone to many of the internal control of risks of traditional businesses.

Internal controls are techniques to safeguard companies from the employees’ misuse of financial and operational information.[9]

Let us discuss the role of internal controls in various risks like information risk, website risk, and financial risk.

Information risk: While doing business transactions in e-commerce, confidential information from customers such as credit card numbers, e-mail addresses, and residential addresses are collected. Companies implement internal controls to make sure that the internal employees do not steal or reveal the confidential information to outsiders. This may create the dangerous issue for the e-commerce company. Internal controls protect a company’s confidential information by using encrypted websites and electronic shopping carts, which limits the employee access to information.

Websites risk: Protecting the company from internal and external risk is another internal control risk for e-commerce companies. Internal control should daily test their websites to check whether any virus has been entered in to their website or to know how vulnerable the website is to hackers and how easily the internal employees can misuse the website programs and functions. e-Commerce companies are normally operated only through the internet, so any risk caused by external threats to the website’s operation is a serious issue for the company. If the website is attacked by any virus or any hacker, the then company’s name will be spoiled, which may reduce the number of customers visiting the website. This risk may also help the competitors to increase their sales.

Financial risk: e-Commerce companies also face financial risk even though they are operated only through the internet. e-Commerce may face a lot of financial risk as it may find difficulty in generating positive daily cash flow because of the fees involved with website protection, hosting, e-shopping carts, and credit card companies. These fees are essential for all the vendors of e-commerce companies and it cannot be avoided.

To overcome these financial risks, e-commerce companies must employ accountants or use a public accounting firm to make sure that no internal waste of cash is going on. It should also make sure that all expenses are relevant to the operations of the company.