Enterprise Risk Management Market: Rewiring Organizational DNA in the Finance Sector

The finance sector is on the cusp of becoming a completely digital landscape, and its transformation is set to change the face of the banking industry in the coming years. While digitalization is promising the finance sector with improved customer experience and lowered expenses, it is also dictating completely new requirements for enterprise risk management companies willing to enter this digitally-transforming sector.

Risk and regulatory compliance functions of financial institutions are seeing a sea change with the convergence of the technology and finance sector, which has given rise to FinTech. Financial service firms are under relentless pressure to keep up with the speed of advancing technologies and implement risk management protocols by deploying digital strategies.

The enterprise risk management market is rapidly moving away from offering solutions to manage analog risks to those that manage digital risks. As the finance sector is being controlled by the labyrinth of strict regulations and rapidly changing customer expectations, the digital functions of enterprise risk management will continue to be compelling for tomorrow’s financial institutions.

Transparency Market Research (TMR), in its latest study, provides a complete 360-degree viewpoint of the enterprise risk management market, and unveils exclusive data about its growth potential in the banking and finance sector.

enterprise risk management market strategy

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Preparing for the Future with Full-scale Risk Functions for Financial Institutions

Though the negative impacts of the 2008 Great Recession are ebbing away, it has changed the definition of risk for financial institutions. The enterprise risk management market has been witnessing a significant push ever since, and it has evolved through the pressures of regulators and the rise of technology in the finance sector.

In 2018, the enterprise risk management market reached a valuation of ~ US$ 3.7 billion. Financial institutions are proactively seeking advanced enterprise risk management solutions to manage process and data risks more efficiently, and most importantly, digitally. In the coming years, the adoption of enterprise risk management software, which can be deployed on premise or through the cloud, is expected to grow at the fastest rate in the finance sector.

With the recent advancements in cloud technology, enterprise risk management companies are focusing on developing cloud-deployed software solutions to manage risks, compliances, and vendors, as well as audits. However, cloud computing technology can make software-based enterprise risk management solutions highly vulnerable to severe data theft threats and cyber-attacks. Thereby, increasing security concerns over cloud-deployed enterprise risk management solutions may create critical challenges for stakeholders in this landscape.

In addition, the high initial installation costs of enterprise risk management solutions and the complexity of developing software that are compatible with traditional banking systems are among the major barriers for stakeholders to increase their client base. This is restricting enterprise risk management firms from expanding their customer base and capitalize on the mounting number of financial institutions sprouting up in the global banking sector.

Enterprise Risk Management Market to See High Demand from Banks

Though developing software that are compatible with conventional operations in the finance sector is challenging, most financial institutions have been voicing the need for establishing a collaboration between information technology and the rest of the operations in their organizations.

Financial institutions, including specialty finance, credit unions, and thrifts, are preparing for the digital future with a strategic plan for technological innovations. However, for banks, investing in technology-driven enterprise risk management services has become a strategy, which is beyond just chasing recent market trends. Banks are putting heavy investments into enterprise risk management solutions to develop their risk operating culture for implementing risk strategies efficiently.

In 2018, banks accounted for ~ 55% revenue share of the enterprise risk management market, and this trend is likely to grow even stronger in the coming years. Leading stakeholders in the enterprise risk management market are focusing on offering digital risk management software and services for banks to capitalize on this trend and improve their sales performance.

Enterprise risk management services are likely to witness high demand, as these services gobble half the revenue share in the market. However, with the advent of next-generation technologies such as artificial intelligence and blockchain, leading enterprise risk management companies are expected to focus on deploying tech-driven software to gain a competitive edge in the market.

enterprise risk management market north america
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Developing Enterprise Risk Management Tailored to Specific Requirements: A Winning Imperative

Sensing a rise in the number of banks willing to optimize their digital risk management organizational models, stakeholders in the enterprise risk management market are focusing on selecting the right technology and appropriate data foundation to meet the exact demand of their customers.

The need for catering to a wide range of risk management demands from end-user institutions in a coordinated way is giving rise to the popular strategy of tailoring features of enterprise risk management services according to end users’ requirements. In addition, horizontal expansion of the product portfolio is also emerging as a winning strategy for market players in the banking, financial services, and insurance (BFSI) sector.

Leading players in the enterprise risk management market are adopting strategies to offer solutions and services that can transform an organization’s risk culture and performance, though it is challenging in the dynamic finance sector. Stakeholders are incorporating advanced technologies to further improve the features of enterprise risk management solutions for the digitally-evolving finance sector.

Enterprise Risk Management Market to Remain a Monopolistic Market

Leading companies in the enterprise risk management market, including Oracle Corporation, Fidelity National Information Services, Inc. (FIS), SAP SE, and Infosys Limited hold half the revenue share of the global market. Market leaders have consolidated their position in the landscape, mainly with their technological expertise. Frontrunners are also strengthening their networks across geographical regions by establishing collaborations and partnerships with technology companies to upscale their position in the enterprise risk management market by bolstering new product development.

The monopolistic nature of the enterprise risk management market will create numerous barriers to entry for small businesses, start-ups, and other new entrants. However, leading competitors in the market, such as LogicManager, Inc., IBM Corporation, and SAI Global Pty Limited, are gaining momentum in the market with one-third revenue share of the market.

Competitors are focusing on strengthening their research & development (R&D) base to develop innovative software by deploying cutting-edge technologies. Offering enterprise risk management solutions in the form of software as a service (SaaS) is expected to augur well for competitors in the enterprise risk management market.

enterprise risk management market segmentation
 
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Analysts’ Viewpoint

Authors of TMR’s study on the enterprise risk management market are of the opinion that, the market will witness healthy growth at a CAGR of ~ 5% between 2019 and 2027. A dramatic rise in the focus on the risk management aspect of a business has been providing a fillip to the growth of the enterprise risk management market. In addition, constant changes in regulatory frameworks in different countries will continue to force financial institutions to adopt efficient and effective enterprise risk management solutions in the coming years.

Market players will have to increase focus on offering regulatory compliance and risk identification & management services to cater to the tomorrow’s needs of end users in the finance sector. Market players will also have to keep in mind that, a 'one-size-fits-all' approach with enterprise risk management never works with the finance services industry. Offering tailored solutions to meet the specific requirements of end users can help stakeholders gain a competitive edge in the enterprise risk management market.

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Global Enterprise Risk Management Market: Overview

  • According to a new market report pertaining to the global enterprise risk management market published by Transparency Market Research the global enterprise risk management market is projected to reach a value of ~ US$ 5.8 Bn by 2027, expanding at a CAGR of ~ 5% from 2019 to 2027.
  • Growth of the enterprise risk management market can be attributed to the high demand for solutions.
  • North America is anticipated to lead the global enterprise risk management market, followed by Europe, during the forecast period. 

Increasing Risk Concerns in Every Aspect of Business Accelerating the Enterprise Risk Management Market

  • Risk is inherent in every aspect of business. Increasing number of risks related to important data are expected to surge the adoption rate of ERM solutions across various business segments.
  • Data risks comprise loss of reputation caused by issues or loss of value or restrictions to an organization’s capability to obtain, transform, store, and use its data assets. Enterprise risk management (ERM) is implemented across all industries to eliminate, transfer, mitigate, or absorb losses brought on by external and internal risks.
  • Enterprise risk management is a complete practice that helps address the needs of an enterprise to manage risks, and comply with various government laws and regulations, and institute good business practices.
  • Additionally, the lack of alignment across an organization intensifies the problems in addressing data risks that threaten the availability, integrity, and confidentiality of data. Therefore, organizations have started to manage data risks by adopting and leveraging advanced risk management technologies.
  • Thus, increasing data risk is anticipated to accelerate the adoption of enterprise risk management, worldwide. 

Increasing Digital Transformation across Banking Institutions

  • Increasing digital transformation across BFSI helps reach and involve customers on shopping portals through social channels or integrated mobile apps. Increase in online transactions raises security & risk challenges for banking institutions, forcing them to adopt advance risk management technologies.
  • As a result, banks are focusing on adopting enterprise risk management solutions to identify potential threats and reduce risks, which is expected to positively impact the ERM market in the near future. 

Enterprise Risk Management Market: Taxonomy

  • The global enterprise risk management market has been segmented based on component, institution, and region.
  • In terms of component, the enterprise risk management market has been segmented into hardware, software, and services.
  • The services segment is expected to account for the largest share at ~ 57% of the global enterprise risk management market in 2019.
  • The software segment is projected to expand at a high CAGR of ~ 6% during the forecast period.
  • Based on institution, the enterprise risk management market has been divided into banks, credit unions, specialty finance, and thrifts.
  • The banks segment held the largest market share. The segment is expected to account for ~ 57% of the global enterprise risk management market in 2019. 

Enterprise Risk Management Market: Regional Outlook

  • In terms of region, the global enterprise risk management market has been segmented into North America, Europe, Asia Pacific, Middle East & Africa, and South America.
  • North America led the global enterprise risk management market, accounting for a substantial share in 2018, with the U.S. and Canada being the major markets in the region.
  • The North America enterprise risk management market is expected to hold a share of ~ 60% during the forecast period.
  • In addition, the Asia Pacific enterprise risk management market is expected to rise at a high CAGR of 6% during the forecast period.
  • The enterprise risk management markets in the Middle East & Africa, Europe, and South America are expected to expand moderately during the forecast period.
  • The report provides in-depth segment analysis of the global enterprise risk management market, thereby providing valuable insights at macro as well as micro levels. Analysis of major countries which hold growth opportunities or account for a significant share has also been included as part of geographic analysis for the enterprise risk management market. 

Enterprise Risk Management Market: Competition Dynamics 

The research study includes profiles of leading companies operating in the global enterprise risk management market. Key players profiled in the report include

  • IBM Corporation
  • Capgemini SE
  • Fidelity National Information Services, Inc.
  • Infosys Limited
  • Oracle Corporation
  • SAP SE
  • LogicManager, Inc.
  • MetricStream Inc.
  • BWise, and Dell EMC.

A new market study on the enterprise risk management market was recently published by Transparency Market Research (TMR), which provides a complete analysis on how the market will grow between 2019 and 2027. The study covers all the growth indicators as well as future prospects of the enterprise risk management market in terms of value (US$ million).

Information featured in the study unveils important statistics and data about the demand for enterprise risk management solutions, as well as the penetration of these services in various regions around the world. This has helped the authors of this study to reach the estimates on the valuation of the enterprise risk management market.

TMR’s study on the enterprise risk management market helps readers understand business strategies that proved profitable for leading stakeholders in the market. It also focuses on various regulations that stakeholders must keep in mind for succeeding in the enterprise risk management market. In this study, readers can also find unique as well as accurate information on the market dynamics of the enterprise risk management landscape, to help companies in adopting appropriate business strategies in the coming future.

TMR’s study includes recent developments that are setting the degree of competition in the enterprise risk management market, along with accurate and complete information about leading players in the market. Leading enterprise risk management firms and companies, and new businesses in the enterprise risk management market, are profiled in the study. The information featured in the study helps readers understand the growth prospects of the enterprise risk management market for the assessment period.

Key Questions Answered in TMR’s Enterprise Risk Management Market Report

  • Which are the winning strategies adopted by market leaders to cater to the changing demand for enterprise risk management in developed countries?
  • Why are developed regions creating more lucrative opportunities than developing regions for stakeholders in the enterprise risk management market?
  • What is boosting the demand for enterprise risk management in banks?
  • How is the regulatory framework in various countries influencing the business strategies of leading players in the enterprise risk management market?
  • What are the major barriers to growth for new entrants in the enterprise risk management market?
  • How will the finance industry impact the growth of the enterprise risk management market with its dynamic and volatile growth prospects?

Research Methodology

The research methodology followed during the production of TMR’s report on the enterprise risk management market includes two main stages – primary research and secondary research.

For conducting secondary research, analysts are given access to a number of external proprietary databases and a large internal repository, which can help them ensure the accuracy of the information collected through secondary research on the enterprise risk management market. Analysts have come to conclusions on how the enterprise risk management market will grow, after deriving exclusive and accurate insights from both, primary and secondary resources.

Primary resources that have contributed to the production of this study include discussions with key opinion leaders, enterprise size expert inputs, response analysis, and data triangulation. Analysts have interviewed c-level executives and well as brand managers of companies in the supply chain of the enterprise risk management market, as well as investors and industry experts, who contributed to the development of this report as a primary resource. Exclusive information provided by the primary resources and secondary resources acts as a validation from enterprise risk management market players, and makes TMR’s estimates on the future prospects of the enterprise risk management market more accurate and reliable.

Key Segments of the Enterprise Risk Management Market

TMR’s study on the enterprise risk management market divides information into three important segments—component, institution, and region. The study can help readers understand how growth of the enterprise risk management market is influenced by the market dynamics, including the emerging trends based on these segments.

Component

Hardware

Software

Services

Institution

Banks

Credit Unions

Specialty Finance

Thrifts

Region

North America

Europe

Asia Pacific

Middle East & Africa

South America