Enterprise Risk Management (ERM) Market

Due to growing demand for integrated platforms that combine operational, cyber, compliance, financial, and third-party risk management, solutions dominate the ERM market. As organizations have adopted full-service ERM solutions, they have realized that having a consolidated view of risk across their operations provides them with the timely information needed for continuous monitoring and compliance reporting. The capabilities provided by these platforms enable organizations to better manage their risk exposure, make more informed decisions, and build stronger governance structures. As such, ERM solutions represent the largest contributor to the overall market revenue.

Operational risk management continues to be the largest segment of the ERM service category because organizations are attempting to create consistent means of identifying, assessing, mitigating, and monitoring operational risk within their organizations regardless of which area they operate in. The overall increase in operational risk management is also encouraged due to the increased frequency of cyber attacks and the growing number of vendors and partners organizations work with, and the increased scrutiny of regulatory agencies on all types of operational risk. Together these factors create a perfect storm of reason for organizations to implement all the different types of modules that encompass cyber risk, third-party/vendor risk, incident & crisis risk management, financial risk, and integrated risk management. The continuing trend toward utilizing AI to quantify risk and automating the monitoring of control environments continues to drive adoption across all ERM categories.

On-premises ERM solutions are popular due to the ability to provide robust internal governance, mitigate risks through less reliance on outside service providers, and allow for high levels of customization. However, with the deployment costs at a considerably lower rate than on-premise solutions and the ability to rapidly grow, cloud-based ERM solutions are being more widely adopted, particularly in the technology sector and the mid-market segment of the industry, as companies rapidly move toward their digital transformation agendas.

The majority of the ERM market share is dominated by large enterprises. This dominance is largely due to the complexity of their business operations, extensive global supply chains, and a heightened exposure to financial, cyber, and operational risks. Large enterprises tend to invest significantly in ERM platforms to develop and utilize standardized risk frameworks and reference models. They also need to meet more stringent regulatory requirements, establish global regional governance structures, and shape their ERM strategies by leveraging risk insights for strategic planning. In contrast, there is a growing trend among small to medium-sized businesses (SMEs) to adopt cloud-based ERM solutions. These solutions offer SMEs affordable options, simplified implementation processes, and increased awareness of the cyber risks and vulnerabilities associated with third-party relationships.

The BFSI sector accounts for the largest share of the ERM market due to strict regulatory mandates, resiliency requirements, and heightened cyber risk exposure. Banks and other financial institutions are leveraging ERM platforms to manage credit, market, operational, and cyber & third-party risks, streamline their compliance reporting processes, and build resilience. Other high-growth sectors include IT & ITeS, healthcare, manufacturing, energy & utilities, and government, all driven by increased digitalization, supply chain dependencies, and an evolving regulatory environment.