Chief Risk Officers (CROs) in financial institutions (FIs) are likely to spend 75 percent of their time on risk data architectures, credit analytics and reporting in 2015, predicts IDC Financial Insights.
FIs are also expected to place more emphasis on risk reduction and management, as encouraged by the security events that happened this year. According to the market research firm, FIs will increase their investments in risk culture through enterprise education by more than 15 percent next year. All CROs will also be engaged in credit risk modernisation initiatives by 2016.
IDC Financial Insights also forecasts that FIs would spend about US$2.8 billion on software and services related to fraud and financial crimes analytics in two years' time. This contributes to the growth of operational risk spending, which is expected to grow at an 8 percent compound annual growth rate (CAGR) by 2016.
"There seems to be no end to above average growth rates in risk technology and service investments," said Michael Versace, global director for Risk and IT Strategy at IDC Insights. "While the waves of regulation continue to pound against margins and profitability, solutions built on cloud, big data, and analytic platforms are offering more opportunities to scale and strengthen the CRO's ability to mitigate risk, perfect risk taking, and contribute to growth and shareholder value."
Other predictions by IDC Financial Insights include:
- 30 percent of top compliance functions will introduce a technological means, business processes, and metrics to manage and minimise conduct failures.
- Industry clouds to disrupt legacy risk operations and contribute to a 10 percent reduction in Know Your Customer (KYC) and other compliance costs by 2016.
- By 2016, threat intelligence security services market will growth at a 20 percent CAGR, with consulting services leading the growth.
- To meet the demand for convenience, 10 percent of mobile-initiated commerce will be biometrically secured by 2016 and password usage will begin to show signs of decay.
- By 2017, with workable boundaries of regulation at state and federal levels, financial institutions find their role in crypto-currency clearing.
The above predictions were announced during the IDC FutureScape: Worldwide Risk Management 2015 Predictions web conference on 12 December 2014. The web conference aims to help company leaders in risk and security capitalise on emerging market opportunities and plan for future growth.
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