Riskonnect provides enterprise-class technology in risk management. The company sells directly to large organizations to help them manage their strategic, operational, and insurable risk. Riskonnect’s solutions are delivered entirely through cloud computing, utilizing the Force.com platform, an approach the company believes enables it to offer superior solutions to the risk management marketplace.
The Marietta, Georgia-based company was founded in 2007 by Bob Morrell, who started programming professionally as a 15-year-old high school student who had to take the school bus to a job where he was the first employee without a college degree. His early taste for technology and a lifelong penchant for programming led Morrell to co-found his first risk management software firm, Risk Laboratories, while a sophomore at Georgia Tech. That firm has since been divested and is now part of No. 2 broker Aon Corporation.
Morrell founded Riskonnect when he recognized that the industry was “upside down.” Risk management and enterprise risk management (ERM) were evolving separately, rather than as an integrated business process. For that reason, Riskonnect started with Riskonnect ERM, which took a new approach by focusing on communicating and visualizing risk, as opposed to a simple database of risks and control. Procuring Salesforce.com’s Force.com platform was Morrell’s first order of business. “It was apparent that the Force.com platform would provide an instant infrastructure with proven security and reliability right out-of-the-box,” he explains. In three months, the company built its ERM application on the Force.com platform.
Riskonnect operates in two distinct but related markets. When it was founded, Riskonnect focused exclusively on helping companies manage strategic risks, commonly called ERM. Failures in the proper practices of ERM are frequently blamed for the financial meltdown that led to the current recession. The company describes this market as immature and even open to definition, but very exciting with huge potential. Related to this is the governance, risk & compliance (GRC) software market, which according to Corporate Integrity is a $30 billion market, $24 billion to $28 billion of which is unaddressed.
Before the recession, ERM had fallen off the radar of corporate America. So Riskonnect expanded to an older market, insurable risk management. Systems sold in this space are referred to as Risk Management Information Systems (RMIS). This highly competitive market was established in the 1970s and is presently dominated by insurance broker-owned vendors that are struggling due to the high cost of R&D required to satisfy the market and keep current with technology. The insurance risk management technology market has a TAM of about $500 million, and Riskonnect’s goal is to get about a fifth of this market.
Riskonnect delivers its solutions for ERM, strategic planning; business intelligence; governance and strategy; claims administration, loss investigation; captive, policy, property, vehicle and fleet management; litigated claims cost analysis; and many other areas through its four products: Riskonnect ERM, Riskonnect RMIS, Riskonnect Safety, and Riskonnect Incident Management. Riskonnect follows a pricing model similar to Salesforce.com, with annual fees per user. Fees also vary depending on the products being employed. Riskonnect partners may sell offerings for as little as $20,000 annually for a small group of users and data integration, while large-enterprise customers can exceed $1 million annually with large numbers of users, data integration, complex support requirements, and a variety of products in use.
The company’s beachhead segment was ERM, specifically in the utility market. It landed Southern Company, one of the largest utilities in the country, within three months of starting Riskonnect. During the recession the company focused on taking away business from established competitors such as Aon and Marsh, in part by promoting its Web-based approach that frees it from having to devote resources to the platform and allows for a greater focus on products. Now it is pushing forward on all fronts as controls on spending are thawing. Other customers include Whole Foods, Kinetic Concepts, Inc., and several global brand-name retailers.
In the first two years, Riskonnect took on minimal financing from industry colleagues totaling no more than $300,000. The company is now entirely self-funding, profitable, and is expanding its team of a few dozen employees. It expects to clear between $8 million and $10 million in revenue this year. Riskconnect says that the current depressed valuations and subsequently expensive capital have given it pause in raising capital, but it has not ruled this out and has been conducting high-level conversations with private equity firms. Strategic investors are always a possibility, but because they come with substantial strings attached, including control of the organization, Riskonnect is not interested in this kind of investment. The company’s independence is key to its message. Strategic investment from a technology firm is a possibility as long as there is the correct alignment.
Riskonnect plans to grow through its partner network, which is just getting underway. Reseller partners include Willis, the third-largest insurance broker in the world that is focused on large and mid-sized organizations. Riskonnect signed a deal with Willis just last month and says that in two weeks, its sales pipeline has doubled. Other partners are the actuarial firm Milliman in a partnership that focuses on ERM, and ClearRisk, a startup firm in Canada that focuses on the mid-market with various risk management solutions, including a cobranded solution powered by Riskonnect.
Morrell is only 36. He has also made personal commitments to the market that he won’t sell Riskconnect off quickly, especially inside the insurance and risk management industry. The company says that is has a duty to “make things right” in the risk management world when it comes to systems and does not take that obligation lightly. To that end, there is still a lot of work to do. Morrell says that they are profitable, having fun, and want to grow this organization in a way that has never been done before. “Some of the happiest people I know are business owners who control their own destiny, make lots of money, and love what they do,” he says.
This segment is a part in the series : The 1M1M Deal Radar 2010