Why Crowdsource Risk?

Operational risk is the risk of loss resulting from inadequate or filed internal processes, people, and systems, or from external events. While this definition has its roots in banking (Basel II), companies across industries are starting to take risk mitigation much more seriously.

Operational risks take many forms. Brand managers bringing new products to market face market risk: If we build it, will they come? Project and operations managers think about execution risk: Will we be able to build it in time and to spec?

All of these risks have some interesting properties. They are all forward looking metrics. Product ship dates and unit or revenue projections for a new product are examples. They are quantifiable and objective. Your employees and partners, though their points of view may differ, probably have knowledge about them. And the true outcome of the event (or whether it took place at all) becomes knowable in the not-too-distant future.

It so happens that these are exactly the criteria we use to determine whether a metric is suitable for crowdcasting. This, coupled with the fact that risk management is moving to the fore (IBM, in a study of 1900 CFOs in a variety of verticals, found that 83% of them are either advisors or decision makers in risk management. “The New Value Integrator”, IBM Global Business Services, 2010), is part of the reason SAP has decided to integrate Crowdcast into their Governance, Risk, and Compliance product suite.

We believe that this is a potent combination. These developments have gotten the attention of the media (ITBusinessEdge) and analyst community (Will Jan of Aberdeen wrote about it here and here). Importantly, we’re starting to see customer traction. There is also a nice big picture story taking shape on the integration of structured and unstructured data, which I will cover in a later post.