17 August 2006

Asia Pacific: OPS Risk Spend on the Rise...

Operational Risk Spend in Asia Pacific is growing rapidly due to the revised Basel II accord which requires explicit assessment of operational risk, endorsements by consultants on the impacts of effective operational risk management systems, and continuous threats from the likes of terrorist attacks.

Financial Insights estimates total Asia/Pacific spending for operational risk systems at US$74 million in 2006. In the next five years, this number is projected to amplify to an inflation-adjusted US$246 million, equivalent to 3.3 times the current value or a compound annual growth rate (CAGR) of 27.2 percent.

This outlook by IDC is taking into consideration the different tiers of institutions including buy-side and sell-side along with banks plus insurers.

Operational risk management was designed to assist institutions identify matrices to determine an institution's risk tolerance, perform data monitoring and analysis to increase visibility of exposures, and create early alerts for immediate corrective action. Several industry incidences illustrated the undeniable correlation between operational risk management and sound business practices, and demonstrated that having control mechanisms in place to minimise operational risk elicits genuine paybacks through loss minimisation and reputation protection.
Consequently, the implementation of operational risk management solutions is accelerating in Asia/Pacific.

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