Report predicts risk vendor consolidation

Of the top 1000 global financial services institutions, 80 per cent have no automated operational risk solution, 16 per cent use vendors and four per cent have it in-house, according to a report released last October by IDC’s Financial Insights.

Authored by Deborah Williams, group vice-president, the report reviews nine vendors of operational risk data, self-assessment, exposure calculation and regulatory reporting software, as well as several emerging players and service providers. The review includes a feature/function comparison of the software and assesses each vendor for soundness and stability. While noting that there is no market leader yet, the vendors profiled in depth are: Algorithmics, COMIT Gruppe, FITCH Risk, Methodware, Portiva, Providus, Raft and SAS.

The report, titled Selecting an Ops Risk Solution: Looking for Stability and Growth, predicts that the solutions that have strong data handling capabilities, a straight-forward, easy-to-use user interface for business line users, and an extreme degree of flexibility in how things are defined within the system will be the most successful.

Williams suggests that the market is due for further consolidation, leaving two or three leading operational risk specialists.

She sees the uptake of commercial operational risk software as very different across geographies, with different factors driving adoption leading to different prioritizations of functionality.

The vast majority of work today is around definition of requirements, data identification and gathering, loss collection, and self-assessment. Software solutions that meet these needs and that provide a path to grow into anticipated analytical requirements are likely to be the most successful, Williams reports.

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