Leading analyst, Chartis Research, forecasts the worldwide operational risk management (ORM) market to grow to $1.68bn by 2013 at a compound annual growth rate (CAGR) of 6.9%. This growth is fuelled by:
• On-going replacement market, as first generation ORM systems have proven to be too rigid or not scalable.
• Ongoing demand from emerging markets of Asia, Africa and Latin America
• Increased demand in specific vertical segments such as insurance, asset/fund management and broker/dealers.
• Convergence of oprisk, ERM and GRC
• Increased focus on benefits of compliance
“Increasingly firms are moving away from their fixation on “box-ticking” compliance and are working towards integrating ORM into everyday business activities.” Comments Peyman Mestchian, Head of Advisory Board at Chartis, “This has resulted in development of value-based ORM initiatives to justify the required budgets for comprehensive ORM and GRC systems.”
On the supply side, the market is still fragmented and selecting an ORM system is highly dependent on the specific needs, sophistication and geographical location of the buyer. Successful ORM software vendors have continued to invest in R&D. Much of this investment has focused on increasing the flexibility and user-configurability of the products. Integration of components such as loss data, RCSA, KRIs, scenario analysis, capital calculation and reporting on a single technology platform has also consumed much of the product development efforts. A clear trend among the leading solutions is the integration/packaging of best-practice content (e.g. loss data, risk/control libraries, KRIs).