Operational Risk & GRC Software Solutions 2010

Operational risk management (OpRisk) is now an established discipline within the financial services industry. The banking failures resulting from the Credit Crunch coupled with increased shareholder and regulatory pressures have made it mandatory for financial institutions to implement systematic and continuous processes for collecting, analysing and reporting operational risks. The volume of new regulation and guidelines also means the overlap between OpRisk, governance, risk management and compliance (GRC) and enterprise risk management (ERM) has become more pronounced.

The broad focus on risk management has changed firms' attitude to OpRisk and GRC. Firms now see the benefit of working towards integrating OpRisk and GRC practices into everyday business activities. This change has resulted in development of value-based initiatives to justify the required budgets for comprehensive OpRisk and GRC systems. Typical business cases include loss reduction, capital savings, improvements in business planning and improvements in reputation as well as external communication.

Chartis forecasts the worldwide financial services OpRisk and GRC technology market will grow to $2 billion by 2013 at a compound annual growth rate of 6.5%. The technology market for OpRisk and GRC is still fragmented and selecting a system is still dependent on the specific needs, sophistication and geographical location of the buyer. Importantly, the overlap of OpRisk and GRC practices means there has been some convergence in software solutions. This trend is one Chartis believes will continue.

Successful OpRisk software vendors have invested in research and development (R&D). Much of this investment has focused on improving the flexibility and user-configurability of the products. Integration of components such as loss data, risk control self-assessment (RCSA), key risk indicators (KRIs), scenario analysis, capital calculation and reporting on a single technology platform has consumed much of the product development efforts. A clear trend among the leading solutions is the integration and packaging of best practice content, such as loss data, risk/control libraries, KRIs.

This report is an update to Chartis' 2009 report on operational risk management systems. It includes an update forecast for market size and sections discussing the convergence of OpRisk, GRC and ERM practices and technologies. The competitive landscape section features the critical success factors for vendors active in this market segment. Vendors covered in this report include (but not limited to) Algorithmics, Avanon, BPS Resolver, BWise, CorProfit, Interexa, MEGA, Methodware, OpenPages, Optial, Oracle, Protiviti, SAS and ARC Logics.