I. COMPANY PROFILE
Corporate Strategy
The company’s strategy was to build long lasting relationship with their client and offer high-quality service. RiskMetrics primary customer was companies and business which requires an efficient and low-cost execution of risk analysis. Their business model was based on short-term software leasing. The company leased clients a CD containing a risk management application priced at $30000 annually per user and was password protected, after that clients paid by the month for the new password.
Organizational Structure
Since RiskMetrics Group was a new company, that formerly was a subsidiary of J.P Morgan, Berman used FLAT organizational structure. There were pro’s and con’s by using this kind of organizational structure:
Competitive Advantage
One of the major competitive advantage of RMG is its payment method. They use leasing payment method to attract costumer and make the costumer financial burden lighter. II. TIME LINE
Early 90’s
The RiskMetrics Group started as an in-house division of J.P. Morgan, the institutional investment bank. Dennis Weatherstone, chair of Morgan in the early 1990s, wanted a simple, concise daily report that measured the company’s proprietary risk at the end of each day. Why? Because the needs for accurate and clear measure of exposure to market volatilities.
In the wake of such financial disasters such as Orange County, Barings, Daiwa and Showa Shell, banks and financial service firms recognized the need for accurate, clear measures of exposure to market volatility. The risk management tool known as value-at-risk, or VaR, grew out of this daily report. VaR attempted to answer the question of “how much can I lose with a 95% confidence” using simple mathematical concepts of variance and probability.
