Collaboration in Risk Markets - Collaborative Technologies and Applications for Interactive Information Design - page 191

introduCtion to effect core business processes. As businesses

move toward deep collaboration, the nature of the
business interactions being done will change, and
this will be reflected in the design of the resulting
information systems.

Collaboration can be an effective way to manage
risk. Key information related to emerging trends
and market risks, when made available in a col-
laborative system, can alert an organization earlier
and improve decision-making. A number of tools
have been developed which can help in this regard
(Wikis, message boards, etc.). However, complex
risk environments are usually not optimized for
deeper forms of collaboration. A model in which
market controls allow for the collaborative ex-
change of risk-based products and information
can address this situation.

CollAborAtive systems
For risk environments

organizational Framework

In order for collaboration to be practical in this
context, various ways of looking at risk market
organization should be considered. There are prec-
edents for collaboration in risk management.
In the area of emission trading, the govern-
ment assigns emission allowances for atmospheric
pollutants produced in the U.S. on a yearly basis.
Polluters that reduce their emissions can sell
their pollution credits. Companies collaborate
toward the most effective solution by buying
and selling pollution credits. This is intended to
encourage companies to make money by adopt-
ing new non-polluting processes. Those that do
not will contribute to the cost of finding better
alternatives.
In energy trading, power generators and users
are never sure exactly how much power they will
need in a given time frame, so they arrange for
production based on estimates. They may buy or
sell power to which they have already committed.
This scheme will allow all parties to achieve the
lowest marginal cost for power. The implementa-
tion of such a scheme is a large potential target
of opportunity for the U.S. economy.
A related use is in the area of alternative fuels.
If controls are used to create longer-term risk
products, which can be fluidly traded, there is the
potential for attracting a new large capital hedge
market for investing in alternative energy, which
is currently a major impediment to its develop-
ment (Davis, 2008).

bACkground

It has been demonstrated that collaboration can
be an effective means to manage risk. Examples
include processes, methods, and tools that allow
users to share and process information related to
risk in ways more effective than would be the case
had they operated independently (van Grinsven,
2008). Decision networks of social agents can
help build the confidence and cohesion required
for successful action in an otherwise uncertain
environment (Boff, 2007). Collaboration involv-
ing group decision support has been shown to in-
crease productivity without information overload
(Switzer, 2007).
The management of risk is becoming a most
important part of the world economic scheme,
as shown by recent financial market difficulties.
Insurance and financial organizations must have
sufficient funds to handle projected risk. Large
corporations may have risk structures that are too
complex to be transparent (Oster, 2002). This situ-
ation makes it difficult to implement a knowledge
management program that could reduce risk.
While many organizations use Wikis and
message boards to facilitate collaboration, these
tools do not enable the rich interactions necessary