NetRisk and PricewaterhouseCoopers are combining their resources and expertise in the operational risk arena to launch a new risk software company. OpVantage brings together NetRisk's RiskOps operational risk measurement and management software, databases and methodologies with PricewaterhouseCooper's OpVaR risk methodology and data. The new OpVantage combined risk database will cover about 8,000 operational risk loss events.
"NetRisk has developed commercial software and has been doing specialized consulting while Pricewaterhouse has a broader offering of consulting in the field of operational risk and has developed their own methodological approach," says Dan Mudge, president and CEO of OpVantage and co-founder of NetRisk. "Together, our respective strengths complimented each other and we're going to incorporate some of the Pricewaterhouse offerings into the NetRisk offerings."
NetRisk and Pricewaterhouse have been working together to combine their databases of risk events, as well as the software to quantify and measure operational risk losses. "It will be adding some additional information that that NetRisk wasn't necessarily providing in some of the software," explains Mudge. "It's still using a lot of similarities in approach, but adding some nuances to the way they were approaching it." The first release from OpVantage is expected to be available mid May, says Mudge, and will feature the first elements of the combined software. He adds, "it will probably take two releases to fully incorporate the elements."
The combined entity also aims to serve a more global client set at a time when operational risk is becoming a hot topic. "Pricewaterhouse will give a more global distribution and reach to a smaller firm like OpVantage," says Mudge. "Operational risk is a burgeoning area, particularly with the Basel risk proposals in terms of charging capital for operational risk."
The new OpVantage software and methodology aims to satisfy the New Basel Capital Accord's Qualifying Criteria for more advanced standard and internal measurement approaches for determining operational risk capital requirements. Currently, the OpVantage is made up of 14 people from both NetRisk and Pricewaterhouse operational risk groups. OpVantage has a combined client base of over 20 institutions. "Given the regulatory push and the interest in the industry, we're going to see a lot of activity in this field," notes Mudge. "And we're well positioned to service the industry in a kind of one-stop shop where we can help with anything from databases to analytical tools to specialized consulting."