According to Chartis Research's latest report on operational risk management systems, the worldwide financial services operational risk management (ORM) market will continue to grow, reaching a total value of $1.55 billion by 2011.
The report has three main findings:
- Many US and European financial institutions continue to replace their first generation ORM systems. This is largely due to inflexible and rigid product design and the ongoing evolvement of ORM methodologies.
- Some market segments, such as emerging regions (e.g. Middle-East, Asia-Pacific, South America), and vertical sectors (e.g. insurance, asset management) are investing in formal ORM systems for the first time.
- Average investment in ORM projects is increasing, as more and more financial institutions are seeing ORM's strategic business benefits and not just a tactical "tick-inthe- box" initiative.
Additionally, the report claims financial institutions working on the demand side of the market are re-examining their approach, culture and systems for managing operational risk. This is as a result of recent high profile losses, rogue trader events, failures in internal controls and processes surrounding the 'credit crunch.' Furthermore, firms have realised that the traditional compliance 'box-ticking' approaches to managing risk do not achieve the desired outcome. Operational risk needs to be treated as an integral part of the overall governance, risk and compliance (GRC) strategy.