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Risk Management Services - Global Outlook

  • ID: 1089928
  • Report
  • January 2012
  • Region: Global
  • 133 Pages
  • Global Industry Analysts, Inc
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The global outlook series on the Risk Management Services Industry provides a collection of statistical anecdotes, market briefs, and concise summaries of research findings. Illustrated with 7 fact-rich market data tables, the report offers a rudimentary overview of the industry, and highlights latest trends and demand drivers. Regional markets briefly abstracted and covered include United States, Europe and Asia Pacific ( Japan, China, Australia, India) and Latin America.

The report offers a compilation of recent mergers, acquisitions, and strategic corporate developments. Also included is an indexed, easy-to-refer, fact-finder directory listing the addresses, and contact details of 261 companies worldwide.

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A Quick Primer 1
A Walk Down the Time Line 1
The Current Financial Crisis & Its Implications for Risk Management 2
Financial Institutions Come Under The Microscope 2
Implications for the Market 3
Pitfalls Highlighted by the Financial Meltdown 3
Table 1: Causes Popularly Perceived as Triggerants of the
Financial Crisis: Percentage Breakdown of the Perceived
Level of Catalysis Played by Each Factor Under Analysis 4
The Changing Landscape of Risk Management: A Post Recession Review 5
Recession Chisels Out a Risk Management Culture 5
Importance of Risk Management: A Lesson Well Learnt 5
Risk Management Then 5
Risk Management Now 6
Companies Compelled to Take a Holistic Approach Towards Risk Management 6
Enterprise Risk Management: A Fall Out of the Holistic
Approach Towards Risk 7
Rationale Underlying the Interest Surrounding ERM 7
ERM: Future Prospects 8
Evolution of Modern Day Risk Management Service Vendors 8
Global Operational Risk Management (ORM) and Governance, Risk Management and Compliance (GRC) Software Vendors (2010) 9
The Future 9
Risk Management Software: A Beneficiary of the Emerging Wariness Towards Risk 10
Operational Risk Management Software 10
Credit Risk Management Software 10
Banks: A Lucrative Target Market in the Short-to-Medium Term 10
Fears Over the Impact of the Recession Calmed 10
Noteworthy Market Trends In a Capsule 11
Enhanced Risk Management Solutions in Great Demand 11
Islamic Finance: An Innovative Area for Risk Diversification 12
Operational Risk Management Gaining Value 12

Table 2: World Current and Future Analysis for Operational
Risk Management (ORM) Software & Services by Geographic
Region - US, Canada, Europe, Asia-Pacific (including Japan)
and Rest of World Markets Independently Analyzed with Annual
Revenues in US$ Million for the Years 2010 through 2015 13

Table 3: World 5-Year Perspective for Operational Risk
Management (ORM) Software and Services by Geographic Region
- US, Canada, Europe, Asia-Pacific (including Japan) and
Rest of World Markets for Years 2011 & 2015 14
Vendor Market Structure 15
Financial Crimes Risk Management Acquiring Priority 15
Disruptions in Delivery Schedules Puts the Lime Light On Vendor Risk Management 15
Business Continuity: An Important Aspect of Risk Management 16
Liquidity Risk Management: The Foundation of Comprehensive Risk Management 16

Defining Risk & “Risk Management” 17
Risk Management: The Rationale 17
Value Creation 18
Fostering Ethics 18
Ensuring Resilience 18
Nurturing Innovation 18
Benefits of Risk Management 18
Contributing to Overall Organizational Objectives 18
Establishing a Transparent and Reliable Corporate
Governance Framework 19
Safeguarding from Unfavorable Variances and Disasters 19
Risk Handling Vs. Risk Management 19
Risk Control 19
Risk Financing 19
Categories Of Risks 20
Strategy/Execution Risks 20
Operational Risks 20
Financial Risks 20
Organizational Risks 20
Infrastructure Risks 20
Governance Risks 20
External Risks 20
Characteristics of The Risk Management Process 21
Holistic 21
Discriminating 21
Assertive 21
Target Driven 21
Delegative 21
Dialogue-oriented 22
The Risk Management Process 22
Setting up the Context 22
Identification 22
Description 23
Evaluation 24
Execution 24
Reporting and Communication 25
Approaches To Risk Management Implementation 25
Experimental/Project Based 25
Policy Based 25
Functional Integration 25
Complete Immersion 25





Market Overview 90

2. EUROPE 91
Market Overview 91
Table 4: Statistical Data Illustrating Changing Perceptions &
Increased Importance of the Risk Management (RM) Process in
European Companies: Percentage Breakdown of Companies, Which
Believe Risk Management Should be Sponsored by the Top
Management - Board of Directors, President/CEO, and
Treasurer/CFO 92

Table 5: Percentage Breakdown of Countrywise Incidence of
Companies Where the Risk Management Programs Report to the
CFO As of the Year 2011 93

Table 6: European Current and Future Analysis for Operational
Risk Management (ORM) Software & Services Market by
Geographic Region - France, Germany, UK and Rest of Europe
Markets Independently Analyzed with Annual Revenues in US$
Million for the Years 2010 through 2015 94

Table 7: European 5-Year Perspective for Operational Risk
Management (ORM) Software & Services Market by Geographic
Region - France, Germany, UK and Rest of Europe Markets for
Years 2011 & 2015 95
Focus on Select Regional Markets 96
Russia 96
Market Overview 96
Credit Risk Management in Consumer Finance Industry 96
BSI Introduces New Risk Management Standard 97

Focus On Select Regional Markets 98
Japan 98
Market Overview 98
Australia 98
Risk Management in the Investment Management Industry 98
China 99
Risk Management and Insurance in China 99
Chinese Banks Adopt LRM and Capital Management 99
India 100
Market Overview 100
An Opportunity for Indian Banking System 100

A Primer 102
Focus on Select Regional Markets 102
Brazil 102
Mexico 102

Middle East, a Growing Centre of Demand for Risk Management 103

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The discipline of risk management, in the corporate world, has undergone a rapid change over the past decade, successfully transitioning from an essentially back-office activity to become a crucial part of the overall enterprise management process. The significance of optimum risk management cannot be undermined, given the growing awareness of the impact of mismanagement of short term and long-term risks, which are typically manifested in the form of loss of market shares, investor confidence, reputation and market value of the enterprise. Winning back or recovering lost credibility in the marketplace is a painstaking task that requires time, effort, and money. It is therefore of little surprise that risk officers, over the last couple of years, have assumed an important role in management teams and wield considerable influence on the decision making process.

The recent 2007-2009 economic recession additionally played its role in compelling organizations to revisit, reassess, and recalibrate their risk management skills and strategies. Currently, growing awareness over the indispensability of effective management of risks has catapulted the practice of risk management to the top of the corporate priority list, which earlier was occupied by issues pertaining to access to short-and long-term capital. With over 65% of companies' worldwide attributing poor and inefficient risk management as the leading cause for the meltdown of the international financial structure, organizational perception of risk is changing rapidly. For instance, the concept is no longer deemed limited to just insurance, loss avoidance and compliance, but has expanded to include all facets of risks that have an impact on the future performance of the organization. This shift in perception has also led a number of companies, especially investment banks and financial institutions, to adopt risk management as a tool for sustainable, long-term growth and to sharpen competitive advantages.

The importance of risk management has been rather lucidly demonstrated by the economic crisis. As a result of the fiasco of efficient risk management, regional and multinational banks and financial institutions have come under greater scrutiny by regulatory bodies and central banks. The regulatory clampdown on financial institutions revolve around four main areas of concern, namely – AML (Anti Money Laundering), financial reporting (SOX/J-SOX), standardization of accounting norms (FAS, IFRS) and capital adequacy norms (BASEL II). Today, banks need to conform to stringent risk management standards as specified by BIS (Bank for International Settlements) under BASEL II. Given, the growing rigidity of the regulatory environment, and the tough stance taken by regulatory bodies, regulatory compliance, of late, has been getting an increasing amount of attention from risk managers. The importance of complying with the full set of government and authority regulations cannot be undermined, since a breach could invite financial and punitive consequences.

The stage is now set for a relentless focus on comprehensive end-to-end enterprise wide risk management strategies, and solutions. The financial industry, especially, is expected to feel more acutely the need to win back the trust and credibility, which the industry has burnt in the recent recession. The culture of risk management is expected to entwine itself into the very fiber of an organization. To succeed at proper risk management, and to extract the full benefit from the successful management of risks, a pan organizational risk management culture is crucial.

While the US market continues to be the biggest market for operational risk applications and services, the Asia Pacific region (including Japan) is expected to set the pace for the rapid expansion of the global risk management services industry in the near future.

Global Industry Analysts ©
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