TECHNOLOGY - Risky business

Historically, risk management was about as grounded in reality as alchemy or soothsaying. But IT skills have moved on, giving resellers additional niches to capitalise on.

Analysing risk was once a voodoo art. It was done on a hunch, on thechemy or soothsaying. But IT skills have moved on, giving resellers additional niches to capitalise on. back of a cigarette packet ... anything but on the basis of fact. These days, it's a heavily researched science. And, unsurprisingly, computers do it best.

Used properly, it is a tool for minimising losses and maximising margins.

No doubt that is why risk management is a huge and growing area - and one from which resellers should be profiting.

There are opportunities to sell beyond your immediate industry, evaluating and managing risk for a whole new range of clients. Most business managers are already aware they run risks of one sort or another. Many will have considered using software to manage them. But not everyone knows how comparatively straightforward it is to use. Gone are the days when risk managers needed white coats and a degree in rocket science. Risk management is now something many managers are tackling; but they need resellers that understand the tools needed to best put this into practice.

This is where systems resellers and integrators come in. Often, being a reliable and proven reseller is a good enough recommendation to present to corporate systems.

Resellers that focus on hardware or networking may feel the job is best done by a specialist risk management firm. But if you do, you will miss out on potential revenue. Because the software is easy to use, there is rarely any need for your client to contract out the job completely. What they're buying is your IT expertise - even if you are unfamiliar with the risk management market.

One option is to divide the workload and profit with others - your expertise in computing together with consultants who are experts in risk management.

This is a fairly common arrangement for those who are starting their venture.

Typically, the reseller gains confidence in the risk management side of things and takes a larger share of the cake.

Many existing management consultancies are pragmatic about resellers entering the market. One of these is Risk Solutions, which serves the oil and petrochemical industry. Risk Solutions technical director, Raj Mann, says: 'Frankly, we would be reluctant to see resellers embarking on sales involving risk management because they would be potential competitors.' But, he adds: 'The issues and concepts are so complex, I think it is more likely we will work with resellers than against them.

If the resellers introduce us to potential customers, we can work out an arrangement so they provide the IT systems and we provide the expertise.'

Luca Leone, marketing manager of Cartograph, says risk management software is increasingly easy to sell. While it was first used for estimating insurance perils, it is now merging with corporate modelling systems and becoming popular as a result. 'Five years ago this type of software was in its infancy, and we had an educational mission to tell people what it could do and how it could make their jobs easier. Now people know about it and there is demand.' Which is good news for resellers and systems integrators.

But risk management means different things to different people. Mike Clyne is a consultant with Line International, which has been working with the Defence Evaluation and Research Agency (DERA) on developing risk management software. He says: 'To some it is a tool which helps them decide whether to insure. With others it is a tool which helps them look at projects in a fresh way, so they can take a business decision on managing and mitigating risk.'

Whichever way you cut it, according to Clyne, it's a mistake to think risks aren't already being managed, albeit in an ad hoc way. 'Part of the value of risk management software is that it brings a degree of formalisation to something which has previously been done intuitively. That's why so many senior managers are interested in talking about implementing it.

That's why it's a growth area, because it means they can control their line managers and regularise their processes.' Clyne has worked hard to make the software easy to use. 'These days it's used by a different type of manager who isn't technical. It's used more for decision support than deciding whether to lay off risk. It means a wider range of managers are using it, and resellers in all sectors and vertical markets can propose it to their clients.'

Clyne confirms that risk management software is now a fact of life for businesses. 'Risk management software is seen as a major issue for a wide range of industry and organisations, from manufacturers to designers to insurance companies to project managers,' he says.

Its increased popularity owes much to ease of use as confirmed by Daniel Drury, MD of Cognition Consulting. 'There is greater awareness of this category of software, and its use is filtering down. Previously, it was difficult to use and needed a scientific approach, but now it is usable by most middle managers.'

Given that most desktop machines have the clout to run sophisticated applications, the learning curve is slight. It's particularly true if the interface is familiar, and that means Windows. 'It is important that the content is in the client's domain,' adds Clyne. 'We have a model that reproduces a formal six-phase approach but which is easy to use and requires the minimum of user input.

A category score combined with a traffic light system indicates the magnitude of the risk, which allows the project manager to focus instantly on key risk issues. It can make 'quick and dirty' quantitative assessments of risk exposure. The objective is to turn high risks into low ones.'

I n this greener age, risk management software can take a holistic role.

'It can be used to ensure a project meets legislative criteria,' says Mann. 'Or to judge the impact of a proposal on the environment or safety, judging the effects of toxicity on where dangerous materials are being used.'

These days, most invitations to tender require a risk management analysis as part of the bid. According to Clyne: 'It's now a requirement. Any firm which responds to a tender must demonstrate it has a firm grasp of the risks involved and a strategy for dealing with it. The risk belongs to the contractors not the company placing the tender.'

In smaller companies, the process may be less formal - just a part of a manager's job. The role of risk management software is to define, crystallise and make the issues visible to the management. To them, this may seem new territory - but their ability to handle risk can often be mapped in their history. It's like scientific fortune telling in reverse.

'The next time that the same conditions surrounding a decision arise, the chances are the risks will be the same,' says Clyne. 'Having a historic record, which often only begins once the risk management software is introduced, minimises the danger of subsequent risk situations.' Sometimes software can help identify risk in unexpected areas. This can be tangible - a property at risk from subsidence - or risk-free businesses in danger from outside forces.

With few exceptions, risk management software isn't at the leading edge.

There are some examples where the internet has been used to download rapidly changing data on global weather patterns.

Generally, most risk management products aren't internet-enabled. Some use the Net for video conferencing, but Annie Watson, a manager at CE Heath insurance brokers, says the most radical and important change has been the growth in networking and multiuser products.

It is now possible for several managers in different parts of an organisation to work together on a single risk assessment.

That software breaks no ground is pretty unimportant. You do not need to be a leading management theorist to aid people's business and your own. In fact, it's to your advantage if you're not.

IT'S BETTER TO BE SAFE ...

Risk assessment software - such as Vizitel's Screenshare - can provide real-time interactive working and full-motion live video.

Jerome Rush, sales director of Vizitel says: 'There are concerns among corporate IT managers that products which allow several managers to work on a single document are not secure but Screenshare is totally safe. It sends the image of the screen rather than the data itself. This means interactive working can take place without affecting the underlying data or surrendering control of it, or the application, or the computer.

'Screenshare is benign in that its installation makes no changes to the configuration files or the settings of the system - yet it can be used to hold virtual meetings and discussions at a fraction of the cost of traditional video conferencing systems. It is ideal for risk management information such as drawings, plans, layouts and photographs, or anything which requires unambiguous communications.' This utility, which brings video conferencing and networking to a basic standalone risk management application, or any other niche software product, uses a GSM connection or a regular telephone line and provides real-time interactive working, full motion live video and fits between a standard fax machine and ISDN-based video conferencing systems.

Rush says: 'It is a powerful tool which allows companies to provide high-level communications to field technicians and sales and support personnel in an effective and inexpensive manner. It can revolutionise risk management applications and solutions.'