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The battle for risk services: Are technology consulting firms and the Big Four best placed to win?
Risk is no longer something that only keeps the CRO awake at night. It has shot straight up to the top of the CEO’s agenda, which is great news for providers of risk services. The market—which reached a value of US$62bn in 2017—continues to grow, driven by the political climate, regulatory pressures, and, of course, the unrelenting challenge of cybersecurity.
As the market grows, competition is intensifying. Not only are all types of consulting firms fighting for a piece of the action, but new entrants are cropping up too: specialist risk boutiques, software providers, and IT services companies, to name a few. However, as we explore in detail in our latest report, the evidence suggests that the Big Four and technology consulting firms are particularly well placed.
The main reason for this is an interesting trend that we have observed both anecdotally, through conversations with senior risk advisors, and through cold, hard data. The risk market is bifurcating into two distinct camps: high-value services, where clients seek expertise to solve unfamiliar problems; and low-cost services, where consulting firms help clients to carry out some of the most familiar and repeatable tasks associated with risk management as efficiently as possible.
However, the complication here is that although clients want two distinct services, they often want both of them at the same time. In practice, this means firms must be able to provide not only specialist expertise, technology, and data assets to solve clients’ biggest risk challenges (high-value services), but also a blend of technology and people to take responsibility for some parts of their risk function more efficiently than they do already (low-cost services).
Most firms will believe that they have an advantage in one of these two, which is undoubtedly a good starting point. However, the Big Four and the big technology consulting firms have the vast resources, broad expertise, ecosystems, and assets to succeed in both. The rest of the competition will need a smart strategy if they are to convince clients that they can offer something better.