Risk management software firm CXO Systems Inc has launched a new executive dashboard system that it claims will break traditional “siloed” approaches to risk management.
The CXO Enterprise Risk Management (ERM) delivers a one-touch visibility and monitoring of risk across the entire enterprise through an integrated view of risk indicators and exposures.
CXO officials say the product is differentiated from other executive dashboard offerings in the market by its comprehensiveness and its integrated stack.
“Many large companies have already invested a great deal of money of in siloed risk management systems…largely for operational, market and credit risk,” said Malcolm Frank, chief executive at Waltham Massachusetts-based CXO, in an interview with ComputerWire this week.
“Our ERM dashboard system provides an overriding layer of integration that manages all the risk aggregations and interdependencies across these systems.”
Frank added, “We’re a different proposition in the enterprise risk space because we’re delivering the entire technology stack for aggregating data across enterprise sources, relating that data to business risk information, and communicating and reporting that risk effectively.”
Architecturally, the CXO ERM dashboard consists of three tightly integrated technology layers: a business information network, which uses a proprietary enterprise information integration (EII) engine to pull together relevant data from disparate enterprise sources; a modeler component, that contextualizes this data into useful business performance logic; and a graphically-rich dashboard presentation layer.
These three layers are implemented as component Web services that interoperate with one another and external systems.
“We’re a true composite application…with Web services both inside and outside,” Frank said.
The ERM dashboard solution was jointly developed by strategic consulting partner James Lam & Associates, an independent risk-advisory firm based near Boston. The firm has effectively productized a risk management methodology into the dashboard, leveraging best practices gleaned from its consulting experience in the field.
CXO also announced that president James Lam will be brought on board as an advisory board member.
Lam explained that since each risk environment is different, there’s usually some up-front consulting required to figure out key risk indicators, evaluate risk incidents, and the state of its regulatory compliance positioning.
The increased demand for risk management solution is being fueled by recent corporate disasters and resulting regulations.
“Enron and WorldCom are essentially high-profile failures in risk management that have given rise to new regulations like Sarbanes-Oxley and Basel. This has created the role of the chief risk officer”.
Frank believes there are over 2,000 chief risk officers (CROs) employed in the US today – mainly in critical infrastructure industries like utilities, transport and financial services where there’s a high consequence of risk.
“These are sectors where if something breaks it’s a CNN moment.”
Frank is seeing considerable traction for its dashboard system initially among CROs and CIOs (for IT risk).
But he casts a weary eye over the wave of dashboard hysteria among business intelligence and corporate performance management software vendors, pointing out that their dashboard solutions often require customers to pull together three or four different technologies – like data integration tools, data warehouses, analysis and reporting tools and corporate portals – often sourced from different vendors.
“This can be an expensive and unwieldy option.”
Frank also believes the problems associated with risk management are more dynamic. Unlike static business intelligence problems on the financial side of the house where you’re looking at the same data over time, the problems of risk management are far more fluid…they’re always going to evolve and you’re always going to be adding new data and tweaking the underlying metrics.”
While CXO occasionally runs up against the likes of SAS Institute Inc in niches like credit risk, Frank said the company competes fundamentally on the issue of an integrated architecture and an enterprise-wide scope.
Since its founding in 2002, after the merger of two California and Massachusetts firms, CXO has drummed up less than 20 customers, including British and American Tobacco, US Department of Homeland Security, Centerbeam, and ADP.
This might seem a modest number until you consider the cost of implementing CXO’s ERM dashboard system – which starts at a cool $250,000.
“We’ve had no push back on price,” Frank said, pointing out that “the alternative approach can cost the company 10 times as much.”
“Many companies today simply employ an army of MBAs that spend weeks scurrying across the company gathering data and creating reports every month for assessing risk. We can do the same thing but in 5 to 10 minutes.
“Typically we don’t need to go into a formal ROI analysis…anecdotal evidence usually justifies the deal.”
CXO employs 50 people and maintains additional offices in New York and Sunnyvale, California as well as development facility in Pune, India. The company has attracted over $12m in private funding from Ironside Ventures, Cisco Systems and other investors.
