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Financial Services - Operational Risk Management market to grow to $1.38bn by 2010

According to Chartis Research’s latest report on Operational Risk Management Systems, the worldwide operational risk management (ORM) market will grow at a compound annual growth rate of 4.7% to $1.38bn by 2010 (Financial Services sector only).

The ORM software market will continue to grow at a steady 7.7% compound annual rate – estimated to be $163m in 2006, growing to $219m by 2010. “The growth in the operational risk management market is fuelled by replacement spend and new demand from the insurance and fund management sectors” said Helen Townsley, Director of Research at Chartis, “we are also seeing increased demand from the emerging markets such as Asia-Pacific, Middle-East and Eastern Europe”. However, Chartis forecasts that the overall market will not be big enough to justify the existence of the current number of niche software vendors.

ORM related consulting services will continue to grow at a healthy 10.2% compound annual rate. Again, this will be fuelled by Sarbanes-Oxley, Basel II and other risk or governance regulations. As the second wave emerges, we expect systems integrators to increase their activity in this area and derive increased revenue from it.

Further consolidation expected in the ORM software market

According to Chartis the consolidation trend will continue in the ORM software market with several vendors suffering from cash-flow and sustainability problems. Recent moves in the ORM software market including i-flex’s acquisition of ORTOS, FRS’ acquisition of Providus, Financial Objects’ acquisition of Raft have shown that this market is still immature and fragmented.

Overall ORM software market standings by vendor

• SAS held on to its top ranking while making significant product enhancements and market penetration
• Algorithmics held on to its second place ranking, with the FIRST database driving its market share. Ci3, Methodware and OpenPages make significant progress to be included in the top 5.
• Agena, Horizon, SAP and Cognos exit the top 15