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IBM organisation, headquartered in Armonk, new york, ranks among the few businesses that has created computing and communications improvements for over a century.
integrated in 1911 because the Computing-Tabulating-Recording enterprise (C-T-R), the company's predecessors can be traced to the 1880s with inventions equivalent to time clock to record a employee's arrival and departure time on paper tape, and the punched card system that turned into used to tabulate census information.
Thomas J. Watson, Sr., a former govt at countrywide cash Register enterprise, joined C-T-R in 1914 and famously insisted on "neatly-groomed, darkish-acceptable salesmen," and an organization focal point on "gigantic-scale, customized-constructed tabulating solutions for big businesses".
His son, Thomas J. Watson, Jr., modified the enterprise from maker of tabulating device and typewriters into a pioneer of the computing trade, introducing the device/360 mainframe in 1964.
these days, that focal point has broadened significantly, with products that range from laptops to these big mainframe methods, and an organization that serves each buyers and small to colossal groups. IBM employs over 386,000 individuals worldwide, and, throughout 2007, recorded $ninety eight.6 Billion in income.
To enhance their assist of the Token-Ring networking technology, IBM added NetView/workstation in 1986, which improved the network management capabilities of IBM's techniques network architecture.
IBM's community management assist work become further more desirable in 1996 with the merger of IBM and Tivoli methods, Inc., a leading provider of systems management software for disbursed client/server networks. IBM's acquisition of Tivoli prolonged its network management capabilities beyond the mainframe to multi-platform, disbursed techniques. These initiatives had been further bolstered with IBM's 2006 acquisition of Micromuse, Inc., and its Netcool line of enterprise community administration options.
The Tivoli utility solutions supplied integrated visibility, handle, and automation throughout distinctive business and know-how belongings, hence maximizing these assets in guide of network operations. These items address a wide selection of network administration challenges, together with:
an additional vital area it really is supported by using the Tivoli suite of utility is the Netcool utility for provider providers, which provides precise-time efficiency and repair administration for provider suppliers. IBM claims that over 1,000 provider suppliers, together with the entire top 20, depend on this community management answer. This kit helps telecommunications, instant, cable, and web provider suppliers in meeting each their present and future provider delivery challenges.
Of special interest is the provider VoIP provider administration solution, which is designed to support all layers within the network and all links throughout it-from the core network to the client's premises-as a result conveniently managing VoIP features and retaining a high quality of event (QoE) for the customer.
The device displays key performance and great symptoms in real time, for metrics including utilization (busy-hour name makes an attempt, minutes of use, and phone locations); VoIP first-class (MOS), call readability index, and speech activity); name signaling (call completion rate, grade of service, and submit-dial lengthen); carrier exceptional (availability, echo lengthen, and publish-dial lengthen); and subscribers (usual profits per user, state of provider events, and open tickets), as shown in figure 1.
A 2nd Tivoli answer, the Netcool business VoIP supervisor, consolidates the management of VoIP applications, servers, and the underlying networking infrastructure, from PBXs to gateways. This device is designed to meet the necessities of both medium and large organisations-in addition to managed service providers.
This providing is packaged with the Tivoli Netcool OMNIbus and Tivoli Monitoring products, and allows for network managers to extend their present monitoring capabilities to the administration of VoIP applied sciences. This answer can scale to guide business environments of as much as one hundred,000 IP endpoints, and offers out-of-the-box guide for each Cisco and Nortel VoIP environments.
For Cisco environments, the business VoIP manager helps Cisco call supervisor and Cisco team spirit, plus edge routers, gateways, and gatekeepers. For Nortel environments, the product supports communique servers, business communique managers, media gateways, far off gateways, and signaling servers.
The system comprises precise-time shows with diverse charts that demonstrate network utilization, capacity, availability, and efficiency metrics, plus customizable ancient experiences. it's designed to function with red Hat enterprise Linux, Microsoft home windows Server, or Microsoft home windows XP professional working programs.
further details on the IBM architecture and products can also be found at 'http://www-306.ibm.com/software/tivoli/options/voip/" fashion="text-decoration:none">http://www-306.ibm.com/software/tivoli/solutions/voip/. Our next tutorial will continue our examination of companies' community management architectures.
writer's BiographyMark A. Miller, P.E., is President of DigiNet enterprise, a Denver-based mostly consulting engineering company. he is the author of many books on networking technologies, including Voice over IP applied sciences, and internet technologies guide, each posted through John Wiley & Sons.
Article courtesy of commercial enterprise VoIP Planet, © 2008 DigiNet enterprise, All Rights Reserved
Mark A. Miller, P.E. is President of DigiNetB. business enterprise, a Denver-based mostly consulting engineering company. he's the writer of many books on networking applied sciences, together with Voice over IP applied sciences, and information superhighway applied sciences handbook, each posted through John Wiley & Sons.
in case you obtained the impact that the eServer i5 model 550 server was not going to be announced (like I did a month ago) or that it had been pushed out to October (as some company companions believed), you were, like us, wrong. because these days IBM is indeed asserting the 4-approach tower and rack-established i5 mannequin 550 server. This new server brings the i5 line to parity with the eServer p5 Unix servers, which can be also in keeping with the Power5 processors and the Squadron server architecture.
The mannequin 550 is closely in accordance with the technology inner the model 570 that changed into fleshed out on July 13, and has a pricing and packaging method that makes it different from the low-conclusion mannequin 520 and the excessive-conclusion model 570. As I expected, the model 550 is definitely a mannequin 570 with its Summit-like clustering facets eliminated so it can not be prolonged past 4-method processing. This 4-means max restrict is crucial within the Unix midrange server market, the place pricing on the Oracle 9i and 10g databases set the pace. Oracle costs lots much less funds for databases licenses on four-way machines than it does on bins that may extend past four-means pricing, and that database can can charge more than the Unix server itself at current fees.
Having a stand-on my own 4-means field appeared less crucial within the i5 market, for the reason that OS/four hundred retail outlets could simply buy a mannequin 570 machine with both two or 4 processors activated and pay a bit added for that growth skill. I have argued that IBM vital an i5 mannequin 550 for the exact same reason that the p5 shoppers do: that there should still be a midrange field that expenses handiest a bit greater than the mannequin 520 however offers most of the merits of the model 570; it mandatory to be in a low OS/four hundred application tier that gave DB2/400 identical pricing to Oracle standard version. here is the belly of the market, after all. In July, when I talked to IBM in regards to the roadmap, i was given the potent influence that the model 550 had been dropped or pushed out significantly. (nobody interior of IBM ever simply comes and out tells you what the plan is, due to the fact that plans exchange all the time.) i was somewhat grumpy about this, and noted that I believed the model 550 bought stepped on as a result of a person in IBM figured out that making OS/four hundred stores purchase a small model 570 changed into going to make IBM and its application companions much more funds.
it is my bet that consumers balked at the P30 software tier that the entry mannequin 570 had, and that IBM realized it needed to get whatever thing in a lower software tier that nevertheless had extra oomph than a mannequin 520. Enter, stage right, the model 550.
The mannequin 550 is in response to the identical four-approach chassis as the model 570, although it is attainable in each desk-facet and rack configurations, while the model 570 is only accessible in a rack-established version. each machines use the 1.sixty five GHz Power5 processors. The model 570 is available in a version with either one or two processors within the container (that’s two or 4 Power5 cores)–that’s the mannequin 570 1/2-means and the mannequin 570-2/4-method, in IBM parlance. The mannequin 550 comes with two full processors within the field, and IBM activates two of the four Power5 cores within the base configuration. one of those processors is activated with i5/OS, while the different is left over to run either AIX or Linux, or to be saved for a rainy day when an i5/OS example is needed to be activated on it. The remaining processor cores will also be activated as mandatory, and valued clientele pays $45,000 to get a base i5/OS license for those cores. including the full “commercial enterprise Enablement” 5250 processing ability on the cores of the mannequin 550 fees $100,000 per core, which is just a little much less costly than it is on the model 570 (except on very significant mannequin 570 configurations, by which IBM simply offers it away). You have to license i5/OS on an activated processor core first after which add the business Enablement.
The model 550 spans from 3,300 to 12,000 CPWs of raw computing vigor. It spans as much as sixty four GB of main reminiscence and might help as much as 548 disk drives or 38 TB of disk skill. The laptop supports up to 40 logical partitions and has two HSL-2 I/O loops. via any measure of past AS/400 and iSeries servers, this four-method field is a monster. but in comparison with up to date Xeon or RISC/Unix boxes, this computer is on par, accept as true with it or no longer. here's no longer a large container. What will also be truthfully referred to is that the 5250 eco-friendly-monitor protocol, and the productive RPG and COBOL classes which are written for OS/400 to take abilities of it for on-line transaction processing, make this look like a bigger box that it's.
The model 550 is in the P20 application tier, and here is enormous. That P20 tier is a lot lower than the P30 application tier for the largest two-means mannequin 520 using the identical 1.sixty five GHz and the P30 utility tier for the entry model 570 machines. This jarring change leads me to trust that midrange retail outlets have been balking at paying the P30 costs to improve their utility, and that i am additionally guessing that application application providers are giving IBM a lot of grief since the recognition of the mannequin 550 may mean that they only sell utility at P20 tier prices in its place of P30 tier tiers. What i might say to the criticism that IBM is without doubt taking is that it is far superior to get a contented consumer paying P20 expenditures than a client moving to home windows or Unix.
The mannequin 550 supports i5/OS general edition, which doesn't present 5250 eco-friendly-monitor processing capacity. A base model 550 with two 1.sixty five GHz cores activated and i5/OS standard version on a type of cores costs $seventy four,000; this rate doesn't, as with the different eServer i5 machines, consist of costs for base memory or disks. With i5/OS enterprise edition on that single processor core, the model 550 charges $266,000.
With the mannequin 550, massive Blue is additionally launching two new variations, which might be in reality nothing greater than fancy methods of saying hardware discounts if machines are used for selected workloads. the primary is the model 550 Domino version, which is a mannequin 550 container operating i5/OS commonplace edition that activates that second core for i5/OS and fees most effective $56,000 if purchasers intend to run Domino R.6 middleware on the field. clients have to display proof of license for two Domino Server licenses with the intention to purchase this container, and that they also have to have an aggregate of 1,500 Lotus customer licenses; it can also be any mix of Notes, SameTime, or QuickPlace valued clientele, and every utility client (instead of each consumer, who might also have one, two, or three of those purchasers) is what's counted. This Domino edition container is being made purchasable only on the model 550 at present, and IBM reckons that the mannequin 550 Domino edition fees forty eight percent under buying a mannequin 550 commonplace edition and activating the 2nd core for i5/OS. (That assessment contains purchasing application renovation for each and every box for three hundred and sixty five days.)
The 2d new i5 packaging option that IBM is saying with, and best on, the mannequin 550 is called the solution edition. This variant of the model 550 is aimed specially on the core third-celebration ERP, CRM, and SCM software suites that are written in RPG and maybe a bit Java. because IBM ought to have gotten some grief from impartial utility providers as it pegged the model 550 as a P20 application tier server, IBM is making it worth their while to get enthusiastically in the back of the mannequin 550 by means of taking the enterprise edition and cutting the fee on the field if it runs core utility suites. The answer edition requires that purchasers buy new licenses to application from the ISVs, however I think there's likely a method to get equivalent pricing on an improve deal. (Most issues within the midrange are negotiable.)
while a base mannequin 550 running i5/OS business version costs $266,000 with two Power5 cores activated and one in every of them with an i5/OS license, the solution version expenses only $206,000. The $60,000 change is not just a reduction; IBM is disposing of some aspects from i5/OS enterprise edition that don't seem to be normal by way of ISVs, similar to DB2 Symmetric Multiprocessing, Tivoli Storage supervisor, Tivoli Monitoring, and so forth. guy Paradise, i5 advertising manager at IBM, says that the price lower isn't just the value of the eliminated software but also includes a discount on the bottom gadget. In mixture, the elimination of those software aspects and the cut on the base server fee amount to a 23 % cut price. in contrast to the mannequin 550 operating Domino version, the 2nd processor is not activated for i5/OS; however, just like the Domino edition, the answer edition doesn't encompass the cost of software application above and past the i5/OS license. here is now not the Plug ‘n Go hardware-utility software bundle that IBM offered in the early Nineteen Nineties.
For the model 550 working i5/OS solution version, Paradise says, IBM approached those OS/400 ISVs which have a worldwide earnings and assist organization, had signed a strategic SMB alliance with huge Blue, and have a huge put in base of OS/four hundred customers. The ISVs who can peddle the mannequin 550 answer version alongside IBM consist of Clear applied sciences, international company techniques, integrated Distribution solutions, Intentia foreign, Lawson application, ny buddies, MAPICS, PeopleSoft, and SSA world.
The eServer i5 mannequin 550 will start shipping August 31.
In next week’s subject of The four Hundred, i will go over a few minor announcements that IBM also made these days.
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Business Applications Editor
Silicon Valley is incubating young companies set up to solve some of the problems emerging in the wake of the cloud-based modernisation of enterprise IT.
One such supplier is Anaplan – which is set on breaking large companies from using Excel for financial planning and sales operations. The firm seems to be gathering momentum, with revenue growth of 134% for the first half of its fiscal year ending in January 2016.
Its chief executive officer, Frederic Laluyaux, said SAP, Oracle and IBM “have not delivered” a simplification of how IT enables business processes, specifically financial and sales planning. He said the advent and growth of cloud computing should have made this possible. He said the technology from these companies will not deliver in future either – despite statements to the contrary – because they are so wedded to their own on-premise enterprise software.
“They have all failed on their promise to deliver usable, scalable and affordable software. People want to be able to test on a small scale and deploy at their own pace. The days of having to spend tens of millions of dollars to fix something in enterprise software are over," said Laluyaux.
“The old suppliers want to monetise every aspect of their intellectual property. We don’t believe in that. Rather, we prefer people to get together and create their own models on our platform.
“The older suppliers fail from both a technology and a business perspective. There is a new generation of decision-makers sick of the old model.
“Any supplier following the old model is in trouble. The old companies are buying up companies who are in the cloud, true, but their basic approach is, ‘My database is bigger and faster than yours,’ and that is old thinking. They are trying to do everything in a closed model – and so they will not be able to cope.”DataDog snaps at the heels of IBM, BMC and HP
DataDog is a New York software-as-a-service monitoring company. Founder and CEO Olivier Pomel said that, as companies move to cloud environments, the established services in the field – from companies such as IBM Tivoli, CA Nagios, HP OpenView and BMC Solar Winds – are no longer difficult to displace.
He said the scale and diversity of cloud applications is now generating management headaches for user organisations in relation to the “large collections of different databases” they have. He said his company has 1,500 corporate customers. It is backed by San Francisco and Europe-based venture capital firm Index Ventures, and the company is now looking at expading into the Emea region.
It will soon open a research and development (R&D) office in France, taking advantage of the country’s strong higher education tradition in engineering. Pomel is himself a product of the Ecole Centrale Paris, as is chief technology officer Alexis Le-Quoc. The R&D lab will be located in Paris’s “Silicon Sentier” quarter.
“Paris is home to prestigious universities and engineering schools, which generate top-notch maths, sciences and software engineering talent”. He said the plan is to get to 50 people in the Paris centre as soon as possible.Synata: Enterprise search built for the age of cloud
Patrick White, chief executive officer of five-person San Franciscan startup Synata, is building his company on an area which, he said, has only recently become fertile ground for a new venture – enterprise search. He said a resurgence of corporate IT interest in best-of-breed technologies, and the growing strength of cloud applications, had created favourable conditions for a technology category undermined – in the eyes of venture capital investors – by the controversy around HP’s ill-fated acquisition of Cambridge company Autonomy. He said the debacle had “poisoned the well of enterprise search”.
Synata’s technology – based on a proprietary graph-analysis algorithm – aims at the real-time integrative search of data sources, such as email and other documents, created with both Microsoft and Google applications. It runs against Box, Google Apps, Office 365, SharePoint, Atlassian products, Dropbox, Salesforce and Zendesk.
“We aim at being the Switzerland of enterprise software,” he said, referring to his company maintaining neutrality in the face of the competition between Microsoft, Google and other large technology companies.
“Our platform aggregates and indexes data from across enterprise services, both in the cloud and behind the firewall. Not only do we support traditional search features, we also promote collaboration by suggesting relevant content to people from around their organisation,” he said.
He said his company’s technology promotes economic productivity by cutting time wasted by such workers as callcentre staff. One of fifty or so customers is a construction firm, which is using Synata’s software for mobility. Another is a technology company in the Bay Area using it in its service function, with ZenDesk, to provide callcentre staff with contextual information.
“It would have been hard to do what we do five years ago”, he added, pointing to a confluence of favourable technology developments, such as the rise of open source big data technologies and cloud.
Download the authoritative guide: Cloud Computing 2019: Using the Cloud for Competitive AdvantageGone are the days when all a network administrator had to worry about was learning and supporting a single OS. Now a firm may have Windows desktops, Linux or Apache web servers, a Unix database, PDAs running Palm O/S, and several Macs running in Marketing.
Now consider the predicament of a managed service provider (MSP). An MSP must design and operate a system that requires minimal customized integration no matter how complex its customers' networks may be.
"Every time you install something on their network, you can blow up the client's servers," says Jim Lancaster, president of MBD Network Services, LLC.
MBD is a network management services provider based in Dallas, Texas. The company provides network monitoring and on-site support for 60 small- to medium-sized clients, each with a network ranging from 15 to 150 seats. Lancaster needed to come up with a standardized method of managing that many networks without affecting the internal operations of those systems.https://o1.qnsr.com/log/p.gif?;n=203;c=204660774;s=9478;x=7936;f=201812281339040;u=j;z=TIMESTAMP;a=20403972;e=i His solution: separate the management from the network operations.
MBD addresses this situation, by installing what it calls a "BlackBox" on each client's network. These consist of Dell Optiplex workstations, running Windows 2000 and loaded with the suite of management tools that Lancaster and his team has assembled over the years. This software package monitors the health of the network and systems, reporting the data back to MBD's Network Operations Center (NOC).
Doing it this way provides one consistent set of software that MBD's network administrators can learn and manage. Client data is reported in a standardized manner into a single console where it can be viewed and analyzed. This makes it simpler and faster to deploy updates since these are sent to boxes with identical configurations. In selecting tools, Lancaster prefers open source since it allows customization towards exact needs rather than making do with vendor feature sets.
"The open source movement has been a huge benefit to us," he says. "Fifty percent of our new installations are Linux."
He also finds that push technology works better than having management tools that pull the data from the remote sites. Instead, his black boxes gather the data from the equipment on each network and then push it through the firewall to the NOC.
"Most of the big frameworks that are in use with an MSP use pull technology and require a virtual private network (VPN) or direct connection to each client," Lancaster explains. "In small networks that is not a secure way to operate and it is a headache to manage."
The BlackBoxes run on Windows 2000 and come with a mySQL database and software for managing event logs, virus protection and firewall events, as well as network management tools.
To centrally manage all the Windows NT/2000 event logs, MBD uses three tools from Adiscon GmbH (Erftstadt, Germany) -- EventReporter, WinSysLog and MoniLog.
EventReporter resides on the BlackBoxes on the client sites and forwards all Errors, Warnings and Failure Audits to a WinSysLog server in the NOC which aggregates the data from all the clients. The MSP then uses MoniLog to produce a daily summary of each client's log entries. The BlackBox also acts as the logging server for firewalls, most typically WatchGuard Technologies, Inc.'s (Seattle, Wash.) Firebox System.
MBD recommends that its clients use Symantec Corp.'s Anti-Virus Corporate Edition. For those who do, the BlackBox includes a copy of Symantec System Center, the control console for the security product.
In addition to the out-of-the-box software, the BlackBoxes also contain several tools written by Lancaster. This includes a suite of Perl scripts, scheduled and run by the BlackBox that generate snapshot reports on Windows NT/2000 servers, NetWare servers, RMON capable switches and American Power Conversion Corp. (West Kingston, R.I.) uninterruptible power supplies.
The boxes also contain a custom-built routine to e-mail the backup logs from all tape drives to the NOC, no matter what backup software the client uses, so MBD's personnel can verify that all daily backups are completed as scheduled. Although he would like to automate the reporting on backups, that hasn't been possible yet due to the disparate ways that different software reports the data.
"The only way you can tell if the backup was successful or not is by reading the log," Lancaster explains. "The subject line on the e-mail may say that it failed, but the only problem is that one file which was open wasn't backed up."
Separating Management from Network Operations
Perhaps the key to MDB's success-through-simplicity approach, though, is keeping management completely separate from network operations. While the above tools provide various management functions, network health is monitored separately.
With thousands of aggregate users to cater to, most would expect MDB to utilize one of the large framework packages for network management. However, Lancaster notes that since each network the company manages is relatively small, these products are much too expensive and cumbersome for his needs.
"We've never been in the market for a comprehensive system like Unicenter or Tivoli," says Lancaster. "They are a massive overkill for a client with two servers and 25 desktops."
The first tool he settled on was WhatsUp Gold from Ipswitch, Inc. (Lexington, Mass.). WhatsUp Gold scans the network's router tables and creates hierarchal maps showing all the devices. It then monitors the Simple Network Management Protocol (SNMP) parameters on these devices and sends alerts when administrator-defined thresholds are exceeded.
While WhatsUp Gold gave MBD some of the information that it needed, Lancaster was still looking for a higher-level tool. This led him to Denika Performance Trender from Somix Technologies, Inc. (Sanford, Maine). Denika works with WhatsUp Gold, but automates the generation of daily, weekly, monthly and yearly historical tracking reports on items such as bandwidth consumption, disk space, CPU and memory utilization.
"We follow the International Telecommunications Union's FCAPS (Fault-management, Configuration, Accounting, Performance, Security) network management model," says Lancaster. "WhatsUp Gold addresses fault, and Denika is the performance piece, giving us the trends over time."
As Denika worked well, MDB upgraded to the same vendor's comprehensive network management suite for service providers -- WebNM xSP. Besides including copies of Denika and WhatsUp Gold, this suite contains modules for help desk, hardware and software inventorying, web cam, environmental monitoring and event log management. Although he decided to stick with the Adiscon products for event log management, Lancaster bought the full package so that he could use the inventory and help desk modules, while also gaining an easy way to present complex information about network issues.
"What we were missing was a way to present data to both the clients and our own engineers," he explains. "WebNM has allowed us to take our service to a whole new level."
This approach also enabled MBD to set up a personal support portal for each client. Through the portal, clients can view their network documentation and contact information, check the status of any service request and read netlog reports. Only one of MBD's clients, however, currently views its performance graphs on line. This client has a WAN connecting nine locations in the Eastern U.S. and wants to track the bandwidth utilization.
The typical customer, though, doesn't need or want to monitor information to that degree. Most are satisfied with being able to use WebNM to inventory hardware/software and know that someone else is monitoring the network so that they don't have to.
"There is a bewildering amount of management technology available, but they are not necessary for small or medium businesses," Lancaster says. "It's the fundamentals that are important, and Somix and Ipswitch address those with cost effective tools that help us provide great service to our clients."RELATED NEWS AND ANALYSIS
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(New Straits Times Via Thomson Dialog NewsEdge) WE have many outstanding statesman whom we revered. In my Form Six history lessons in the early 70s, one that fascinated me was Benjamin Disraeli, (British premier 1804-1881). One of his famous statements was: "What we anticipate seldom occurs; what we least expect generally happens". This quote has a lot of relevance to the art and soul of risk management because its fundamentals are not complete without the understanding of "uncertainty" or "unknown". Indeed, risk is all about the uncertainty of risk occurring. If we know the risk will occur, we will not do the deal or execute the operation.
The fact is that we do not know, and only hope that it does not occur.
For this reason, we diligently apply all the known ways of managing the uncertainty of risk occurring. Obviously, it is not easy to prevent the risk from occurring, especially if it is something beyond our control. But if it does occur, the negative impact would be minimised to that we could accept or live with. After all, we are not too concerned about the risk per se. Rather, our focus is on the impact of the risk that may be negative for us. If the impact is positive, or we gain from the risk, then of course that would be welcomed. WHAT CAUSES UNCERTAINTY? Uncertainty crops up because of few factors that haunt our mindset, attitude or opinion. They include: * Uncertainty due to poor overall decision and wrong opinion: The feeling that the option or decision we take would be the wrong one; * Uncertainty due to rationale or relationship: The rationale or relationship of the issue being studied might be seen from the wrong perspective where we may have inadequate parameters; * Uncertainty due to doubt in the analysis process: The model/guide-values for our evaluation of the issue may be irrelevant or wrong; * Uncertainty due to inadequate sampling: The statistics that we use for the assessment of the subject matter might be insufficient, unrealistic, incomplete or outdated; and * Uncertainty due to errors and biases: The analysis done for the samplings taken might be tainted with errors and poor human judgment.
The above five factors causing the doubt. The elements of unknown/uncertainty in us can turn haywire to our risk management programme. To minimise such unknown, it is vital to ensure that these issues are adequately addressed.
RISK OCCURS FROM THE UNKNOWN. It is not easy to manage unknown events, as some of the risks are beyond human controls, such as flood, earthquake, tornado and robbery. However, managing the negative financial or non-financial impact might be easy to strategise. For example, we can keep all our precious assets on higher floor, so that should a flood still occur after a heavy rain, the negative financial impact and damage by water would be minimised. Or we would install an alarm system in our premises so that should the robbers came unannounced, they might abort the raid because the alarm bell was triggered. Thus the risk of robbery is mitigated. Assuming we have taken the burglary insurance cover, should the robbers succeeded in carting away the valuables, we would have the financial loss minimised because we have insured the valuables and could claim back the amounts from the insurance company.
THE PAST AS GUIDES TO MOVE FORWARD. Machiavelli, an Italian philosopher and statesman who lived from 1446 to 1507, once said, "Wise men say, and not without reason, that whoever wished to foresee the future might consult the past." More often than not, risk managers rely a lot on past data and historical events to chart forecast and assess the various risks inherent in any organisation. A lot of truth prevailed in the quote by Machiavelli. In some instances, history tends to repeat itself because the same kind of risk could surface again at some later time, if such risk is then not effectively managed using the lessons learnt from the past risk occurrence. RISK MANAGEMENT IS A PROACTIVE ART. Of course, we must be mindful that risk management is not about history alone. It should have balanced proactive feature - using the previous risk occurrences to predict what would happen in both the short and long period in the future. It is not a fallacy to state that risk management is about moving forward. It is about preparing and predicting the future state of events and operations using past patterns or historical trends in supporting such predictions.
SIX WAYS TO TREAT THE UNKNOWN. How do we treat risk? There are many ways, but the more popular options are: i) Avoid. We can simply avoid the risk and do not do the deal. But this is not really risk management since there will be nothing to manage anyway, given that the transaction or operation is aborted. But not everything is as simple as that. There are risks that we have to face everyday, and as part of our way of doing the business and operations. ii) Share. We can share the negative risk impact by putting up a strategic alliance, joint-venture or merging our smaller outfits to bigger outfit that can withstand more risk or cushion the negative impacts. There is truth in the adage of "strength in unity" and the bigger the size, the stronger it should be. iii) Transfer. A good example of risk transfer is using insurance. An insurance policy taken to cover the damage and loss by fire would provide comfort to the property owner as he would be able to receive the financial compensation benefits from the insurance company. However, not all risks could be insured. We are still left at the mercy of the non-insurable risks. So, the need to ensure that we have a good risk management plan to address those non-insurable risks is very critical for the success of any organisation. iv) Reduce. We can reduce the likelihood of the risk to occur, and minimise the negative impact of the risk by either cutting down on our exposure or involvement in the operations.
v) Accept. Many risks that haunt us are common day-to-day events that cannot be avoided, which we address as the cost of doing that kind of business. We need to accept those risks as a normal way to do the business. An example of this kind of risk is a supermarket's cashier with a minor cash shortage at the end of the day's takings. vi) Prevent. Some forms of risk can be prevented from occurring. For example, theft of valuable asset from a strong room is a risk. One way to prevent this is to ensure that no one can enter the strong room alone, and a closed-circuit TV must be installed for monitoring purpose. There must be at least two people holding the keys and going in at any time. The writer is chief risk officer of a commercial bank and author of Enterprise-wide Risk Management Made Easy. He can be reached at e-mail: email@example.com. Part two of this article will appear next Saturday.
Copyright 2006 The New Straits Times Press (Malaysia) Berhad. Source: Financial Times Information Limited - Asia Intelligence Wire.
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