Organizations are always on the lookout for any way to break down their basic business processes into numbers, models and formulas. Analyzing the heaps of data they collect on a daily basis can give any company a strategic leg up on the competition.
But while tangible aspects—like sales for example—are relatively easy to analyze, more abstract concepts like risk can be a bit trickier to pin down.
The pressing need to measure risk in a quantifiable way is helping drive growth in the Global Risk Analytics Market, which is growing at a CAGR of 13.95 percent from 2014-2019.
What is Risk Analysis?
Risk analytics is a set of tools that rely on various assumptions, including risk prevention and risk retention, to manage uncertain events.
Financial organizations have started developing risk analytics models and formulas to protect themselves against unforeseen risk and reduce regulatory capital. Many other organizations are also developing risk models to optimize and mitigate risks that can negatively affect the organization’s products or services.
Since risk can be financial, operational, or strategic in nature, the risk analytics process includes priority-based risk identification and use of internal and external data to measure risk. Additionally, future events can be analyzed and predicted, and necessary actions and business decisions can be taken by analyzing historical risk patterns.
Applications of Risk Analytics Solutions
Risk analytics is a core element of the risk management framework because of the complex regulatory environment, continuous market pressure for better risk-free performance, and the need to make informed decisions. The various applications of risk analytics solutions are:
- Fraud detection and prevention in the banking and financial services sectors. This includes analysis and control of risk, identification, and removal of fraudulent factors.
- Market liquidity risk assessment. Effective market liquidity risk management helps banks meet their cash flow requirements.
- Real-time situational awareness, which helps organizations achieve immediate and long-term goals.
- Product portfolio analysis. This is the study of the products of an organization to improve market performance, and also minimize the product failure rate.
- Credit risk analysis, which involves analysis of business and industry category, financial statement analysis for strengths and weaknesses, cash flow analysis and projections, and analysis of credit risk.
- Benchmarking risk management, which involves comparison of risks measured with the international risk management standards.
Who’s Using Risk Analytics?
- BFSI Sector
The use of risk analytics solutions is expected to increase across a number of enterprise verticals during the forecast period, with the BFSI sector poised as the frontrunner, in terms of adoption. The banking sector is expected to invest more in risk analytics than all other user verticals as these solutions help with system integration, modeling, data quality, and sourcing.
- Telecommunications Sector
The telecommunications sector is expected to be a major end-user during the forecast period. Increased competition in the telecom sector is leading to reduced revenues, and annual losses as a result of fraud are estimated to amount to more than US$40 billion worldwide. Hence, many telecom operators are looking to risk analytics solutions to reduce revenue leakage and attempt to generate incremental revenue.
- Government Services Sector
The government services sector is another major end-user of risk analytics solutions. Government agencies use risk analytics for activities as broad as weather predictions, border management, policy control, and decision making.
- Healthcare Sector
Healthcare organizations use risk analytics solutions to ensure food safety and reduce the risk of drug contamination, in addition to controlling, storing, and accessing user data.
Overall, opportunities in the Global Risk Analytics Market are expected to increase significantly over the projected period. Various sectors are adopting risk analytics to provide better results in a shorter period of time at minimal cost. Other major end-users that are expected to have a big impact on the Global Risk Analytics Market through to 2019 include:
- Consumer Goods and Retail Sector
- Manufacturing Sector
- Transportation and Logistics Sector
- Information Technology Sector
- Media and Entertainment Sector
- Energy and Utilities Sector
