TABLE OF CONTENTS

Risk Consulting – State of the Market...............................................................................................2

A) Need of Risk Management (hiring Risk Managers)...........................................................2
B) Sizing the Opportunity...................................................................................................................4
C) Target Market....................................................................................................................................6
RISK CONSULTING – STATE OF THE MARKET

A) Need of Risk Management (hiring Risk Managers)

Risk management is an important process because it empowers a business with the
necessary tools so that it can adequately identify and deal with potential risks.

The main service offered under risk consulting segment is enterprise risk
management and/or financial risk management. This field helps clients identify,
assess, manage, report and limit the risks they face through establishing more robust
risk processes and better internal controls and KPIs to precede and monitor risk
management.

Major Risk Faced by the Organizations

Source: FERMA European Risk Manager Survey Report - 2022

This can span strategic risks and operational risks (e.g. supply chain interruptions) to
credit risk, market and liquidity risks. It also includes functional risks, such as IT risk
and internal audit risk. In providing risk services, these consultants also work across
strategy, organization, processes, governance and culture to drive change.

Another service area is Cyber security, which according to the researchers has grown
to the biggest risk management service, estimated at $15 billion. Consultants
specialized in cyber security help clients with developing a frontier that makes them
stronger in battling attacks, this includes improving IT infrastructure, embedding
security across all processes, but also changing culture internally that makes cyber
vulnerability lower – several studies show that cybercriminals capitalize on errors
made by internals.
 Activities under the ERM risk manager responsibility in 2022

Source: FERMA European Risk Manager Survey Report - 2022

Broadly risk management comprise five essential elements

- Risk Identification – Risk manager carry out an extensive evaluation of the business
from both an internal and external perspective. This allows them to identify each and
every relevant risk, which to one extent or another poses a threat.

- Ownership Allocation - Risk ownership, means who has control over the risk or is
responsible for its supervision

- Planning Control Measures – To determine the most suitable approach for

controlling, reducing or eliminating it altogether.

- Strategy Implementation – This is a process that often means site-wide changes to

operation procedures and the involvement of every member of the workforce. Risk
managers work closely with senior management throughout the process.

- Assessment and Enhancement – The assessment and evaluation process allow the
risk manager to identify areas for improvement, critical holes in the current strategy
and where it has proved to be most successful.
B) Sizing the Opportunity
Risk consulting industry is a billion dollar industry which is highly competitive in
nature. According to Research and Markets latest available statistics, Risk
Management Consulting Services Market size was estimated at US$ 106.05 billion in
2021, US$ 113.60 billion in 2022, and is projected to grow at a CAGR of 7.20% to
reach US$ 161.03 billion by 2027.

Risk Consulting Market Size (in Billion US$)

161.03

113.6
106.5

2021 2022 2027

Source: Research and Markets

According to US country business survey, currently there are more than 137000
consulting business are operating in US. Consulting industry structure shows it is
hyper fragmented and primarily consists of small, non-employing firms that service
narrow geographic or niche markets.

Consulting Industry

Large Consulting Firms Small consulting also

known as regional/local or
Boutique Firms
 Economic characteristics of Small and local consulting firms

Market size The number of consulting firms entering the market is

increasing in response to the proliferation of the smaller sized
businesses. The general and Management services sector
remains strong.

Number of buyers The small businesses are growing in number and seek
expertise in order to grow their businesses. This trend appears
to be strong with no immediate signs of contraction.

US – Number of Business Growth (in %), 2009-2021

Source: IBIS Research

Size of rivalry Competition exist in all shapes and sizes from small firms to
individual practitioners. Due to low barriers of entry and an
increase in market opportunities new firms continue to enter
the market.

Pace of Technology has allowed the smaller firms to enter the market
technological overnight and compete on a global basis. Society’s acceptance
Change of technology as “a way of doing business” allows the smaller
firms to function without administrative and fixed asset
overhead.

Product The smaller sized specialty boutiques often use independent

differentiation practitioners as a way to increase their offerings. Unlike the
larger consulting firms the disciplines have not fully integrated
and remain distinct; such as strategic planning and marketing
 services, finance and technology.

The key product differentiator is the background, expertise and

personalities of the consultants.

Experience curve- The smaller firms require less business experience since the
Ease of clients (small companies) are less experienced buyers and seek
Entry basic foundational advice.

The overhead of a small consulting firm is low and therefore

enables a firm become established almost overnight.
Technology supports the smaller firms in this endeavor.

C) Target Market
According to available information, overwhelming majority of industry revenue is
generated from the private sector, with an estimated 77.0% of revenue coming
directly from businesses. Financial services, consumer product and manufacturing
industries represent the largest private businesses; however, the industry also
garners revenue from government organizations, individuals and nonprofit
organizations.

US –Consultant Revenue by Industry (% Share)

Government orga- Financial Products

nizations Companies
14.60% 16.60%
Manufacturing
companies
11.00%

Technology & media

Companies
9.80%
Individual and non -
profit organizations Financial Services
8.40% companies
Life Science and healthcare Com- Energy & Utilitiy Companies 23.80%
panies 7.80%
8.00%

Source: IBIS Research © Copyright Protected (For All Facts & Figures)