The increasing number of regulations and the growing sophistication of new financial products and instruments such as credit derivatives have led to financial institutions sleepwalking into complex environments of silo-based processes and risk systems. This fragmented approach to compliance and risk management has resulted in many firms looking for the Holy Grail: “integrated enterprise risk management”. Furthermore, the recent credit crisis coupled with high profile operational and business losses have pushed governance, risk and compliance (GRC) further up the board agenda. The traditional silo-based “box-ticking” approach to risk management is no longer valid.
Chartis predicts that an enhanced form of Basel II, possibly named “Basel III”, will be introduced between 2012-2016 requiring national regulators to address many of the limitations and gaps in the current Basel II standards. For example, banks will be required to set aside more capital against complex structured credit derivative products and off-balance sheet vehicles. This will result in a new wave of expenditure in risk technology between 2012 and 2018.
This report examines the demand and supply side of the market for credit risk management systems. It covers the key market and regulatory requirements, the implementation challenges, competitive landscape and vendor rankings. The report also provides a forecast for the future: market size, potential winners and emerging best practice.