In most industries, including the software industry, North America is the critical proving ground. If it can make it in the United States and Canada, it ought to be able to make it anywhere.

Ben Salama respectfully disagrees-at least when it comes to high-level risk management software. "Europe may prove a more critical market than North America," he explains. "Although the United States has some top-tier global banks, most of the interest in the American banking industry is concentrated in regional markets where risk management with a global focus is often beside the point. In Europe, however, even mid-size banks engage in a great deal of international business to sustain their revenues."

Salama came across Algorithmics three-and-a-half years ago, when he was hired by a client to research risk management software. "At that point in time, Algorithmics was in its infancy. I saw a company that had phenomenal knowledge of technology and finance, although its software development process was still immature," he says. During those years, Salama kept in touch with Algorithmics' CEO Ron Dembo, a relationship that proved profitable-earlier this year Dembo hired Salama to manage the firm's European operations.

Algorithmics had built up a considerable business in Europe by simply dispatching consultants on airplanes. Now, the company is building a support and development infrastructure in Europe, to be headquartered in the United Kingdom. Salama's new goal is to double the number of Algorithmics clients in Europe by the end of the year and derive more than half of its revenues from European sales and support by 1998.

British by nationality, Salama's new job brings him back to the city where he grew up. After receiving a degree in math from the Hebrew University of Jerusalem and an MS in Computer Science from the University of London, Salama has worked in a number of European countries as well as in the United States. Although he says that he will miss the hard-driving business ethic he found in the United States, Salama is pleased to be finally returning to London with his wife and two daughters, ages 12 and 14.

Forecasting net income on mortgage-backed securities is one of the trickiest challenges in finance. Typically traders use Monte Carlo analysis to create a distribution of future interest rates and, in turn, predict the future income of their mortgage-backed portfolios.

But this approach has its share of problems. Monte Carlo analysis requires many iterations-and therefore a lot of time-to produce accurate results. Monte Carlo can also produce sampling error; this means that the "random" market factors your Monte Carlo engine generates may be skewed. Monte Carlo, moreover, is not a good vehicle for evaluating American-style options, which are frequently embedded within mortgage-backed securities.

Ardi Tavakol, the new vice president of risk management at Kamakura Corp., thinks he has a better solution-term structure modeling techniques developed by Dr. Robert Jarrow, the firm's director of research. He argues that by using a one-factor term structure model to the predict the distribution of short-term (that is, overnight Federal Funds) rates, users can forecast net income without using Monte Carlo. Tavakol says this product will be available in the fall.

Like many in the risk management software industry, Tavakol does not have formal training in technology. Instead, he received both a BA and an MA in economics from University of California at Los Angeles, as well as an MBA from the University of California at Berkeley. When he is not working, Tavakol spends time with his wife and young daughters, ages 4 and 1. When he can find the time, Tavakol is also an enthusiastic tennis player, skier and "lunch-time 'Sci Fi' reader."