Spending on risk management by capital markets firms is expected to consume one-quarter of IT budgets by 2018, according to forecasts by IDC Financial Insights.
Globally, the analyst house expects expenditure on risk information technologies and services to grow to $79.2 billion in 2015 and $97.3 billion by 2018, representing a 7.2% compound annual growth rate.
As a percentage of total IT spending, which is forecast to crest $530 billion by 2018, investments in risk technologies will account for an average of 17.1% of overall IT spending in 2015 and growing to 18.2% of total spending by 2018.
Business sectors with the highest growth rates are compliance and internal controls, credit risk, and information/cybersecurity.
The capital markets sector has the greatest percentage of overall IT spending allocated to risk information technology and services, reflecting regulatory compliance requirements and IT modernisation trends. For 2015, the percentage of overall IT spending dedicated to risk and compliance is 22.2%, growing to 24.2%.
Michael Versace, global research director, IDC Financial Insights, comments: "Growth in risk management investments continues to lead all functional areas in terms of dollars allocated to hardware, software, and services that run the financial markets. With growth continuing to increase, firms must place their risk functions squarely in the middle of IT optimisation initiatives and require them to work across compliance, treasury, finance, operations, product, and IT disciplines and towards universal data management and integration standards, system capabilities, talent and metrics that improve risk-based decision making at a line of business and enterprise level."