RadarRadar – Commodity Data and Risk Management
RadarRadar is a software vendor focused on commodity data and risk management. Norbert Verhagen, Managing Director, however, points to its commodity data management expertise as its key focus and rightly so, as without its proven ability to essentially pull in, validate and enrich commodity data using the Radar Engine, it could not then provide the visualization tools to inspect that data to aid users in a variety of risk and related areas. These tools, or modules, include risk management, position and performance, regulatory compliance, and dynamic margin management. Essentially, RadarRadar has evolved into a vendor that helps larger companies in the commodities space make sense of their data – data that is usually trapped in a variety of different solutions such as ERP, CTRM, bespoke solutions, and Excel.
Typically, medium and large commodity firms, especially those that trade or do business with multiple commodities, have a plethora of systems containing data important to the business. That data can be commodity trading data, price data, budgets, FX data and so on and it resides across multiple systems within and without the enterprise. It is often difficult to access the data and certainly difficult to enrich and aggregate it to extract additional business value from it. This is RadarRadar’s niche. Over the past few years, working with very large commodity firms, RadarRadar has developed the tools and expertise to help make sense of the data via their data management engine and visualization modules, Mr. Verhagen said.
“We have a fit for purpose approach using our solution set,” he told me. “Some of our customers need help with data management but have perfectly adequate third-party risk tools like a VaR model, for example. They simply need our help with the data management side. Others also need risk or other tools as well as help with data management,” he explained. It has been successful in ags & softs and recently in energy, in helping customers in these areas.
One area of huge potential to use RadarRadar’s expertise and technologies that Mr. Verhagen sees is those in the processing and industrial side of commodities. Firms that utilize raw materials to create products and goods that are sold to consumers. These firms are more than ever exposed to volatility in terms of raw material procurement, as well as energy and labor expenses yet are often forced to provide long-term price stability for their customers – meaning they carry all the risk. “Fast moving consumer goods is an even more challenging segment,” he told me. But this is one area where Mr. Verhagen sees lots of opportunity for RadarRadar as it can use its expertise to make sense of complex data – budgets, prices, bill of materials, procurement contracts and so on to provide actionable margin information. This may include substitution or hedging, for example, and RadarRadar can help the decision-making process, he said. Of course, in these sorts of businesses, hedging can also be seen as risky especially as often there isn’t a one-to-one hedge with a specific derivative. Again, RadarRadar can help here, he suggests, by helping users decide on their strategy and explain it to management and others. “We can help explain the underlying position, exposures and positions.”
RadarRadar already has several customers using its margin management module including crushing plants and bulk product specialists. These customers have experienced other benefits, he told us, such as better planning and reporting of local procurement to HQ to optimize hedging, automating the extraction and processing of data – even from spreadsheets – where errors can be identified and eliminated, and so on.
Mr. Verhagen sees RadarRadar’s competition as often in-house development by internal IT departments. However, he points to their 20 years of experience and track record across a very diverse portfolio in the industry as a distinct advantage. “The devil is in the details and often these are not at all obvious until later in a development project,” he explained. “Our experience pays dividends here as we have faced many challenges and devised the approaches and tools to solve these issues already.”
Currently, RadarRadar is rather unique in the space combining commodity data management tools with specific aggregation and visualization modules in multiple areas of the business such as risk management, margin management and so on. It is the seamless combination of the two that allows RadarRadar to deliver value for its customers across the space, he said.
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