Enterprise-wide risk management has long been hobbled by a plethora of offices running on different data platforms, networks, hardware and software. The usual response to this conundrum has been to create a massive physical data warehouse which provides a centralized repository for literally all of a bank's current transactions. But many firms are discovering that maintaining such a large, unwieldy data structure is very difficult to do on a real-time basis. Enter the next generation of warehousing technology: the virtual data warehouse.

A virtual data warehouse uses "middleware" technologies that helps manage systems resources, coupled with sophisticated data modeling that creates more efficient data records. The resulting architecture permits real-time-or, at least, almost real-time-access to global risk data without the multitudinous hassles of maintaining the physical warehouse described above.

Although generic middleware systems such as ORBs (object request brokers) are currently in limited use at Chemical, CIBC and elsewhere, the new virtual data warehouse takes the concept one step further. Developers at Frankfurt-based Commerzbank have lately developed what they call a "dimensional, virtual data warehouse" through an innovative combination of proprietary SQL tools, replicated multidimensional data models, ORBs and a sort of memory buffer they term a "metadata layer."

Those firms that like the idea of a virtual data warehouse but do not want to build their own from scratch may want to look at a prepackaged alternative developed by Redpoint Systems,.one of the newest names in the rapidly expanding derivatives software business. The company's TotalRisk system uses a distributed memory buffer to link geographically dispersed databases managed by "risk engines" that will allocate the firm's computing resources to various tasks. The result: real-time data without the hassle and sluggishness of massive data warehousing. TotalRisk runs on Windows NT and is compatible with Oracle, Sybase, Informix and other relational databases. The systems analytics are courtesy of an agreement with Glassco Park. Minimum base line costs will be $400,000 plus. "Redpoint's TotalRisk is the closest thing to a complete solution we've seen yet," says Evan Bauer, a vice president at the Cigna Information Group. Bauer thinks that the tools managing the data flow in and out of the buffers are particularly elegant. He also believes that TotalRisk's architecture is fairly similar to the ORBs': to see areas of difference and commonality, see the chart at left, which summarizes current data integration options.

The follow-up to the marriage of Sailfish Systems and Reuters last September been closely watched in the risk management trade. Many speculated as to whether and when the powerful wire service would actually incorporate the acquisition into its product line. Last month the answer came: after six months of checking out and tweaking Sailfish's latest product, RiskManager, Reuters risk management salesforce will peddle the product to its vast worldwide client base, while Sailfish personnel will continue to prospect among non-Reuters clients. RiskManager is an integrated front and back office firmwide risk management system.

The 1996 Great Timing Award goes to Goldman Sachs, which last month launched no fewer than four technology indices-this after technology stocks had suffered deep attrition, and would go into free fall some days later. Goldman also deserves the "Inventor of the Wheel Award," since the world is already awash with indices in this sector, including a half dozen born in the last year. The Goldman Sachs Technology Indices (GSTIs), which will be listed on the CBOE, could have some appeal to the cognoscenti who want to orchestrate a number of different technology baskets. There are GSTIs in broad-based technology, computer hardware, software, semiconductors, the Internet, multimedia networking and computer services.

One claim to fame of the new Goldman Sachs Technology Index (GSTI), on which options are now traded on the CBOE, is that it is the first listed index where the umbrella index is constructed with traded sub-indexes for the constituent categories of technology. Thus investors can use the various GSTIs to value and monitor performance on a real-time basis across these sub-groups.