A new way to look at risk?

A new way to look at risk?

The aim of KRM22, the new venture from serial technology entrepreneur Keith Todd, is to provide a cloud-based console to enable users to have “a single, holistic, real-time view of risk across their organisation”. It is an impressive ambition but there is a long road ahead to realise it.

Todd was an early pioneer of software-as-a-service transforming Ffastfill, a company he joined as executive chairman in 2002, into the leading provider of software as a service-based risk and trading technology before selling the business to ION.

Now he is setting his sights on developing the concept of risk management as a service. He has spotted a disconnect between the unprecedented focus on risk management at a board level and the ability of existing systems to provide a comprehensive view of risk.

KRM22 therefore has been launched to develop a risk platform that will sit on top of existing risk management systems and provide that single view of risk. Users will be able to programme the console to focus on the risks that matter to them and a traffic light system will gauge the levels of risk across the organisation.

“Fragmentation of risk management systems is a huge problem across the industry,” Todd told FOW. “Some firms have 30-40 risk management systems in place.

“There has been a massive increase in costs across the capital markets driven by increased regulatory requirements and the need to manage risk at a much more granular level than before.

“This is hitting return on capital invested and there is a clear need to simplify the systems used to manage risk across an organisation.”

The business is backed by some serious names in the mid-cap technology investment world and is seeking to acquire companies with “components in the risk management space” that can be integrated into the console.

KRM22 will design the console to read feeds from incumbent risk management systems and will also develop an “app store” through which third-parties can sell software to be integrated into the platform.

Building out the business

Todd sees three phases of development towards a fully functioning comprehensive view of risk for customers.

The first is for clients to understand what they have in place currently, then they can overlay existing operations with the enterprise risk API offered by KRM22.

Finally, he says they can start to replace existing systems and re-engineer their risk management operations.

The key challenge for Todd and the KRM22 team will be to build up and integrate functionality through acquisitions and inhouse development rapidly to realise his vision of a comprehensive view of risk.

Replacing incumbent systems at financial institutions is notoriously difficult at and while the vision of the “risk console” is clearly attractive and likely to garner a lot of interest from the outset, building in new systems based on KRM22’s acquisitions will be a lot more complex.

Todd and his team will also have to manage the inevitable a tension that will arise between the promotion of KRM22 “apps” and existing and new third-party products sold through the “app store”. To develop the phone analogy further, KRM22 is trying to build the handset, the operating system and the apps.

But KRM22 is right to identify the opportunity. Risk management has developed in silos across most organisations and many back office systems lag far behind the speed and sophistication of the front office. If Todd and his team can realise their vision, it will represent a major step forward for the industry.