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Credit risk technology market to grow to $8bn by 2010

According to Chartis Research’s latest report on Credit Risk Management Systems 2006- Basel II and beyond, the worldwide credit risk management systems market will grow at a compound annual growth rate of 7% to $7.96bn by 2010.
The pure credit risk software market will continue to grow at a healthy 11% compound annual rate – estimated to be $1.2bn in 2006, growing to $1.8bn by 2010. “The growth in the credit risk technology market is fuelled by Basel II, the growth in credit risk derivatives and the increasing use of economic capital for managing financial performance” 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”.

Expenditure will come in waves as focus shifts from regulatory compliance to value-adding performance management. The “beyond-Basel II” spend will be driven by the growing need for risk-based performance management leading to investments in risk and finance IT infrastructure and integration.

Enterprise Risk Management (ERM) is the ultimate goal

According to Chartis Basel II has acted as a catalyst for moving financial institutions toward ERM. There are significant overlaps between credit and market risk management, operational risk management, financial management and IAS/IFRS initiatives. This has resulted in firms adopting an integrated view and investing is systems and processes for ERM.

Credit risk management software vendors – the leaders have emerged

There are a variety of vendors from many different backgrounds. The competitive landscape includes risk technology specialists, ERP and Business Intelligence software providers, data management vendors and systems integrators and consultants. Chartis ranks Algorithmics, Fermat, Reveleus, SAS and SunGard as the leaders in this space.