RiskTech100 2024 Winner’s Spotlight: RiskSpan

US data management and analytics provider RiskSpan continued its climb up the RiskTech100 in 2023, moving up 11 places and improving its ranking for the fifth consecutive year. A specialist in the mortgage-backed securities (MBS), structured finance and private debt markets, RiskSpan’s flagship product is the Edge Platform, a cloud-native, end-to-end solution for market risk and credit risk analytics. Clients include some of the largest financial institutions in the US, with end-users including portfolio managers, traders, risk managers and analysts.

Data-first strategy, cloud-native solution

RiskSpan believes that its data-first strategy is a key factor in the company’s sustained success. Bernadette Kogler, CEO of RiskSpan, states, ‘We offer a comprehensive source of data, as well as conventional and AI models, both proprietary and third-party, and a cloud-native platform that supports powerful analytics. Most offerings out there don’t incorporate data. We do, and that makes our solution a very elegant, single source of comprehensive data, predictive modelling, sophisticated cash flow analytics, and, of course, technology.’ Adding to this strong data-first approach is the integrated data as a service (DaaS) element of the Edge platform, which validates data formats, auto-fixes common issues and corrects invalid or missing data to ensure that the underlying data is of the best quality for analysis purposes.

Kogler also points to the Edge Platform’s cloud-native architecture as a key point of differentiation, ‘We are 100% cloud-native, which means we fundamentally help clients modernise their approach to investment management. Many still operate on legacy on-premise solutions, but with our cloud-native approach, we can scale up or down to meet a client’s specific needs, regardless of how small or how large or how sophisticated their analytics.’

This cloud-native approach is particularly valuable given the complex nature of the assets that RiskSpan specialises in, ‘We are focused on complex assets that are data and model-intensive,’ states Kogler. ‘In particular, investors in consumer asset-backed and mortgage-backed securities often need to manage hundreds of data points on millions of underlying loans. Because we can scale, we can handle very large portfolios of whole loans and run them at loan level so our clients can analyse loans individually rather than in cohorts or rep lines.’

With the Edge Platform fully hosted on AWS, RiskSpan’s SaaS-based approach also offers the advantage of a cheaper and faster deployment, allowing for a quicker time to value for customers with no need for lengthy on-premise installations. In addition, clients benefit from on-demand cloud pricing, which provides significant cost savings. The company is also testing a consumption-based pricing model with a view to offering clients greater flexibility in charging structure, regardless of where they are on their growth journey.

Finally, supporting the technology offering, RiskSpan also considers its deep bench of experts a key differentiator. ‘We have a strong team of experts in the financial industry, as well as professionals in analytics, data science and governance. With this combination, we make it easy to get answers at the intersection of finance and technology,’ states Kogler.

New partners

One of the biggest developments at RiskSpan is its partnership with database provider Snowflake, which has gathered significant momentum in 2023. Kogler elaborates, ‘Snowflake is an extremely powerful database. Our partnership with them means that we don’t just provide our clients with data; we also offer a database solution. We capture all of the performance data for client assets, and then, using Snowflake, clients can easily access their portfolios and do trend analysis within the solution. This is really powerful. Some companies don’t even have this information, or they cobble it together on the fly. Here, it is just an extension of the platform, which is accessed by user interface (UI) or API. The reception from clients has been tremendous!’

Expanding data coverage

Over the course of 2023, RiskSpan has continued to build out its partner ecosystem to offer its customers access to new data sets and capabilities. In March, for example, it announced the addition of commercial real estate and commercial and industrial loan data intake, valuation and analytics to the Edge Platform, while in January, it announced the incorporation of Fannie Mae’s and Freddie Mac’s Single Family Social Index data.

Similarly, RiskSpan is also building out its coverage of the private credit space. ‘More and more investment managers are gravitating to private credit, but there are no systems out there that can handle it in any type of scalable way, which is a need that we are looking to address,’ explains Kogler.

Climate change is also a hot topic for RiskSpan’s clients, who need to understand their climate exposure. Kogler says, ‘We’re partnering with climate vendors to bring this data to our clients, with the platform also providing modelling cashflow analysis and technology. Climate change is also a good example of why our ability to scale and analyse data at the most granular level is so important. If you’re running an analysis at a cohort level, you can’t really analyse the impact of climate change because that needs to be at a property-specific level. With RiskSpan, clients can do just this and view loans at an individual property level.’

Growth strategy

Alongside product investments and partner relationships, RiskSpan has also invested in its people. It now numbers 120 people, and in April 2023, it appointed a Chief Revenue Officer to help drive the company’s growth strategy. It has also announced plans to increase, by 50%, the headcount of its Chennai, India, operations to support product development, client operations and consulting, as well as enlarging its team focused on developing innovative solutions for clients.

Other growth plans include expanding to new international markets; one initiative for 2024 is to evaluate which markets offer the greatest opportunities. RiskSpan is also expanding its distribution network. ‘We cover very complex assets that most vendors do not cover. They’re very data-intensive and compute-intensive, so a lot of companies just shy away from it. Part of our strategy next year is to team up with other vendors that have a gap in those asset classes and enable them to offer analytics for loans, structured products and private credit as part of their solution as well,’ explains Kogler.

Product plans

From a product perspective, RiskSpan has a number of developments in the works. High on the agenda are plans to build on the capabilities of its partnership with Snowflake. Kogler states, ‘Together, Snowflake and the RiskSpan applications want to enable collaboration between business partners. For example, if you have an asset manager who works with a third-party valuation firm, rather than emailing files back and forth or using File Transfer Protocols (FTP), we’re going to allow secure permissions to allow access between two institutions so that they can share data so that it never has to leave the platform.’ RiskSpan believes the development will be a step change for the industry and save companies significant time and effort in reconciling two data sets. As Kogler notes, ‘If they’re sharing one version of the data, there’s no need to spend time reconciling it.’

Artificial intelligence (AI), particularly generative AI, is also an area of focus. ‘We have two parallel work streams in the AI space,’ states Suhrud Dagli, RiskSpan Co-founder and CTO. ‘One is focused on the initial use of AI internally to bring products to market faster. For example, we can use AI to build, test and deploy new code and enable faster delivery of results. The second stream is looking at how we can embed generative AI within our analytics. We have some prototypes already developed, but the aim is to eliminate the low-value routine work analysts perform so they can spend more time on high-level thinking and analysis of the data. It’s early days, but change is accelerating and the initial results from the prototypes are really exciting. We have no doubt business processes will change dramatically over the next couple of years,’ adds Dagli.

Ultimately, RiskSpan’s goal is to help investment managers take a modern, agile approach to investment management. ‘Institutions have historically been slow to adopt the latest technology, but the COVID-19 pandemic really accelerated the need for a modern, cloud-based approach,’ explains Kogler. ‘Now, with generative AI coming to the fore, there is generally a fear among financial institutions that they will be left behind if they don’t invest. We have a modern platform that uses the very latest technology, and we help our clients to be light and nimble in their approach to investment management.’