This is a transcription of our interview with with Susanne Katus, Brand & Business Development and Corporate Secretary at Datamaran
Boris: Welcome to our Interview with Susanne Katus. Susan is a VP Brand and Business Development and Corporate Secretary at Datamaran. Datamaran is the only software platform in the world that identifies and monitors external risks, including ESG, which is Environment, Social and Governance trusted by blue chip companies and top tier partners.
It brings a digital and data driven business process for external risk management in house at anytime. Susan, thanks for your time and for you coming to our interview today.
Susanne: Thank you Boris, for having me.
Boris: Absolutely. My pleasure, Susanne, could you tell us a short story about Datamaran? What are you up to this day and what is your role at the company?
Susanne: Absolutely. So Datamaran really started with the vision that to be an authentic and trustworthy Corporate leader in today's modern age, you really need to have a wider viewpoint on Risk and opportunity in the landscape. And you need to consider a wider group of stakeholders, beyond traditional shareholders, but also you need to look at your employees. You need to look at your customers, you need to look at your business partners and understand what does it mean to mitigate risks, but more importantly, unlock opportunity and create value.
And we saw an opportunity where a corporate leader is really just didn't have access to useful Risk insight into these environmental, social corporate governance risks. What we like to call external risks because they really cover a wider dimension. And so we saw an opportunity to use advanced technology, which we now have a patent on as well as data analytics to provide useful insights into these types of risks and opportunities, but beyond providing insights and data also provide a more structured and systematic Business Process through which companies could continuously identify, prioritize, and monitor how these issues evolve over time.
And so we started off about seven years ago with this vision at the time the market wasn't quite ready. What we mean by that is that we didn't see the CFO or the CEO, or even the chief risk officer really engaged in understanding these types of risks and opportunities. This was really led by a specific team within companies that traditionally has been called the corporate sustainability team where the corporate ESG team or even corporate social responsibility team.
So we've been working predominantly with those teams over the past seven years, but in the past year, the market woke up and we see that for instance, in the World Economic Forum Global Risk report, they're even saying now is the time that C-suite leaders, Risk experts, CFOs need to become more authentically engaged on these issues and understand what types of risks and opportunities are attributed to them.
Boris: You said you have a unique solution in the measuring external risks. Could you tell us in more details how are you different from other software providers operating in this space and what are some examples of your customers use cases?
Susanne: Absolutely. So, Datamaran is different in quite a few ways. One in terms of the information that we source. So we look at publicly available information to understand competitive, regulatory, both short-term and long-term as well as reputational risks tied to these types of issues. This is what we have a specific patent on what we're actually analyzing is a narrative information from these sources to provide more objective and comparable information over time.
So traditionally risk assessments might be more internally focused or operationally focused or financially focused. What Datamaran does is it looks at the external landscape to really assess the likelihood, impact and velocity of these wider, external and systemic risks.
The way that we do that is really to provide the business process that companies really lack and have lacked for a long time, because these issues tended to be, as I mentioned, managed in silos or through more ad hoc processes, like manual desktop research, surveys, asking for a specific group of individuals opinion on really what are the most important risks or opportunities, but today opinion just isn't going to cut it.
You need data, you need facts, you need an audit trail. So Datamaran provides that the business process, the data, the audit trail.
Boris: So how can you help a corporate executives advance risk oversight with regards to your solution and how do you manage real external Risk if you could just give some examples?
Susanne: Yes, absolutely. So through the platform that we provide, Datamaran ultimately the individual who accesses that is in complete control of the criteria that's helping to inform the output.
So what Datamran itself provides are three main things, a diagnostic report, which will essentially assess where you as a company may be leading or lagging on particular issues. We track about 380 different risk factors.
So it's quite comprehensive. We classify those risk factors into broader categories, such as economic risks, environmental risks, employee risks, social risks, innovation, and technology risks, governance risks.
And ultimately through that diagnostic report, you'll see what are the blind spots, the areas that we as a company just may have missed because we didn't have access to this information before, but also what are the opportunities for us to differentiate ourselves in the market and showcase our leadership and speak more authentically to certain issues.
So through that diagnostic analysis, not only do you see the blind spots and the opportunities for differentiation, but you're also able to then see what are the key risk drivers. Is this predominantly a competitive, regulatory or a reputational risk? You can get down to that source data in that raw data to better understand how are other companies actually tackling this risk, how are they positioning themselves on that information? So ultimately you have the diagnostic analysis, which can then be used to update your risk register.
It can be used to update your annual reporting, financial reporting, ESG reporting, proxy reporting. And then most importantly in today's day and age where the landscape is really evolving quickly, you can monitor how these issues change over time. Is the velocity increasing? Is it decreasing? Has it stabilized? And so you have that more proactive approach to looking at these types of risks and opportunities.
Boris: Fantastic. Susanne, what trends are, are you seeing in the risk management discipline since the beginning of pandemic?
Susanne: A key question that I get when I speak with, with certain individuals is when we talk about risk, what else, what about opportunity? What about value creation? So I think there's an awakening happening in the risk landscape where people realize that risk is not just about minimizing risk, but ultimately a key objective is really about gaining a wider understanding of both the risk and opportunity tied to certain issues.
ESG traditionally is treated as a separate category. In reality, it's just a label. It's a label used to describe certain types of issues that either present risk and/or opportunity and ultimately the company needs to have information to make that proper assessment. So they can then determine their risk appetite, their risk mitigation strategy. So what I'm seeing is this awakening and this understanding that there's a broader horizon of risks that companies need to be attuned to, and too you really need to use a wider set of external data sources to have a really good understanding of those types of risks and opportunities.
And only really through technology are you able to get that type of information, but also more proactively monitor that information over time. The manual processes these days just won't cut it, given the speed of the way the landscape is changing.
Boris: And what happens with regards to the new Biden administration? What effect it might bring to a company because there are new legislation, probably some new interesting initiatives. What do you think about this?
Susanne: Yes, absolutely. What's happened is there's been a lot of technical groundwork already, already laid out for regulation and policy in the U S. Now it's just a matter of essentially pulling that trigger. And what we're seeing is that's really making chief risk officers, CFOs CFO CEOs aware that they can no longer be reactive. And this is exactly how we work with companies. For instance, Merck, they said, you know, we need good market intelligence. We need to be able to look around corners because if we're going to be reactive, that's just not going to cut it anymore.
And that's not just from a regulatory standpoint, that's also thinking about access to capital and engagement with your investors. So what we're seeing in the Biden administration is essentially they're turning up to the heat on the problem that a lot of companies face, which is we don't have a process to really effectively understand these types of risks and opportunities.
What are we going to do about that?
So we're not caught with having to scramble and respond to regulation once it hits, but we're better prepared for this type of regulation when it does hit, which will likely happen in the next couple of years.
Boris: So what from your perspective is a major misconception about Risk, maybe in other words what are you seeing in the market that is not what you like?
Susanne: Well, I think I already spoke to it to a couple of those. One of which is there tends to be a very internal focus when you think about Risk at a company level, you tend to rely predominantly on a subject matter expert opinion to really assess risk or opportunity. And that a key objective of risk management is to minimize risk.
I think those are quite common misconceptions and it's understandable because especially when we think about the types of risks that we're thinking, we're talking about climate change, employee wellbeing, corporate culture, public health, they're complex, and they're hard to measure and they're hard to manage.
And I think that's also another misconception is that Risk needs to be quantifiable. It needs to be measurable, but really it's about understanding what has the potential likelihood and impact of a risk or opportunity from as many different angles as possible. So you feel confident in the decisions that you're making about how you're going to ultimately treat that type of a risk or opportunity and the type of policies that you're going to put in place at a company.
Boris: Interesting. So What role does technology play in risk management and what investments risk management people should be thinking about at this time? Because there are a lot of new technologies, artificial intelligence, machine learning and so on. What is your opinion about this?
Susanne: Ultimately technology is there to advance and support. We as humans, of course have our boundaries. We're a very good creative thinkers. We're very good strategists, but at the end of the day, our time is better spent not trying to source this information and make sense out of it, but really to understand what are we going to do with this information? How are we going to disclose to our annual reports information that proves to our different stakeholders that we're aware of these risks that were on top of these risks.
So ultimately technology provides companies and Risk analysts, and officer's in particular with an ability to optimize efficiency and effectiveness, increase their agility. But more importantly, it provides a type of insurance policy. And that's really what we see with this external risk landscape. It's a new type of insurance policy to ensure essentially that you haven't missed anything in the wider landscape, that there are no blind spots that may have been there before, simply because of the human capacity to look at information, analyze information, and monitor information in a consistent and structured way.
Boris: You already noticed a connection between Risk and ESG. They were in the past in different buckets, but how are they connected from your perspective?
Susanne: Its interesting because ESG related risks and opportunities have always existed in some form of another. We could argue that cybersecurity was within that bucket. And for a long time, we didn't understand the real financial and wider implications of that risk, but in the past decade, obviously it's become quite clear. 2020 was another prominent example of just, you know, there's sort of these calm hydraulic forces that have been at play around these types of risks and opportunities that have just gone into acceleration mode now.
And we can't ignore the fact that ESG type risks and opportunities present real financial and wider implications for companies. I think the biggest challenge there has been just the time horizon associated with these types of risks and opportunities. They tend to be in the longer term horizon in terms of playing out and impacting a company. But what we see now is that obviously things can change. What companies might think as a material risk today can change tomorrow.
So, what we're seeing I think is just, again, this sort of awakening that's happening in the wider market and really lead corporate leaders, understand they can no longer push these risks aside or treat them within a silo. They really need to have them integrate it across their key business processes. And that requires involvement from the Risk team, the finance team, the strategy team, the ESG experts, the CEO, the Board. So it's a really, it's about ensuring that you're able to integrate that into that wider strategy.
Boris: Interesting. So maybe for my own perspective, as a leader of Global Risk Community, a social platform for Risk Management managers, I would like to hear your opinion. How could we from your perspective contribute to better understanding of this complex world of risk management?
Susanne: Well, I think it's looking to what types of external sources you can trust, how can technology help you, really thinking about that complexity and relying on different types of experts who have already gone through thinking about that complexity.
What we're seeing within the companies that we work with, which are predominantly large Fortune 500 companies, is that you have ESG type experts, you have Risk experts, and now you need to bring those two mindsets together, to really take a better understanding of how do we deal with these types of issues, but ultimately it also comes down to the company taking ownership of that process.
I feel a lot of companies today are relying on standards to guide what are the types of risks and opportunities that they've, you need to focus on, but ultimately those standards are static and present a certain Global consensus. John Coats from the division of corporate finance at the FCC recently made a statement saying that for companies, the types of risks and opportunities that are relevant to them will depend on so many factors, the context in which they operate their value chain, their countries of operations, their sector, their size, their key business partners and stakeholders.
So, I think one is looking at what types of external sources technologies exist. What types of expertise exist within your company already and bringing those together.
Boris: Interesting. So these were all my questions. Is there something that you would like to add that I forgot to ask you?
Susanne: No. Maybe I can ask you a question in terms of what are you seeing with ESG related risks and opportunities and how risk professionals are embracing those today.
Boris: Actually with regards to the topic of our conversation, I never heard about it maybe before two years ago. I was not in the ESG space. I was working mainly on the banking risks, but now I hear all thetime about this topic. I saw in the reports recently that analytical firms have to grade companies based on their ESG score.
So it's very important for investors to have a good grade. I'm not sure how will it actually relate to an actual situation, but at least ESG is as important now as a good finance and a good cybersecurity to obtain better ratings
Susanne: Absolutely. And that's an interesting point you brought up about the investor pressure as well, because there's a lot more pressure now on investors to also think carefully about how they're assessing risk and opportunity from the ESG lens. And then, it's an interesting dynamic because a lot of investment management firms tend to rely on these rainy beat ratings and rankings that have existed for so long. The challenge there is those ratings and rankings, are tend to operate in a black box in terms of how they actually go about their assessments.
So what we're seeing is that investors too are now being asked to prove and show, how are you actually looking at a company from this risk and opportunity perspective? Are you looking at our source documents like our annual financial reports, our 10 Ks, our ESG reports. So there's an interesting maturity happening on both fronts and just like companies needing to take ownership of that process. We're seeing that investors are starting to need to take ownership of that process as well.
Boris: Yeah. Okay. Thank you Susan for your time. I think it was very interesting Interview and I wish your company, a steady growth and involve not only Fortune 500 companies in the ESG space, so we will have ethical companies in the future.
Susanne: Yes. Authentic, trustworthy leaders. That's what we're here to support. Thank you so much, Boris.