Risk consulting “booming” in the UK suggests Source Global Research report

Risk and regulatory work is now the fastest-growing consulting service in the UK, breaking the £500 million barrier for the first time. Helping today’s organisations comply with regulations, address cyber threats and manage the fall-out from major corporate scandals has led to double-digit growth in risk and regulatory consulting, which was up 11.8% to reach a total of £507 million last year.

Analysis from Source Global Research (Source) has also found that the ‘Big Four’ advisory firms are well situated to win work here as big names carry a lot of weight with the regulators. Indeed, this is one important reason why the ‘Big Four’ soundly dominate the risk consulting market.

Risk work has a much wider reach than just regulatory compliance, though. The Volkswagen emissions scandal, outrage over how some supermarkets treat their suppliers and fall-out from the TalkTalk hacking episode have all helped to place reputational risk front of mind for many consulting clients. The latest Source report notes that social media makes wrong moves in this area far costlier than they once were as bad news can go viral in seconds.

The report also finds that cyber security is having a huge impact on risk consulting, with some consulting firms telling Source they hit 40% growth for this type of work during 2015. The work here is high-profile and tends to touch on all areas of an organisation, as the last few years have proven that threats come from a variety of sources.

Fiona Czerniawska, director and founder of Source Global Research, said: “Consulting firms are eager to invest in risk and regulatory matters in order to take advantage of all the growth that’s available, but many of the skill sets required are deeply specialised and rather hard to come by. Firms may find this restrains their growth prospects more than any other factor.”

Heavily regulated industries drive growth

In particular, those industries with heavy regulations, such as financial services and pharmaceuticals, are driving much compliance work for consulting businesses.

A managing director from the financial services sector has explained to the Source report authors why the ‘Big Four’ firms are favoured for helping with this compliance work.

“Sometimes,” said the managing director, “we’re engaging consultants as a result of a direct suggestion from the regulators, who might tell us that we need to go out and generate an independent view on X, Y or Z. We’ll definitely go to a name-brand firm in that instance so that we can show the regulator we’ve been responsive and engaged with the right people.”

However, the Source report does point out that, although regulation remains a big driver of consulting firm revenues in the financial services sector, it’s now starting to look a bit less of a cash cow. Source says that there’s less pure regulatory work around as regulation volumes start to fall and banks begin to emerge from the post-crisis compliance pressure that’s wiped out all hope of pursuing other types of projects.

In turn, this shift away from huge volumes of pure compliance work threatens to hit the ‘Big Four’ firms the hardest, but growth in cyber crime could help fill this gap.

Stephen Vinnicombe, UK CEO at Capco, explained: “Cyber crime changes the products and services we’ll offer. It’s not really a one-time consulting service. Rather, you need a repeat approach, simply because the risk doesn’t go away. It just evolves. You cannot apply a single solution and be confident that you’ve taken care of it for a while.”

Fiona Czerniawska concluded: “With no reason to think that growth in risk and regulatory consulting will slow down any time soon, we fully expect 2016 to be another very good year in terms of business volume.”

About the Author
Brian Sims BA (Hons) Hon FSyI, Editor, Risk UK (Pro-Activ Publications) Beginning his career in professional journalism at The Builder Group in March 1992, Brian was appointed Editor of Security Management Today in November 2000 having spent eight years in engineering journalism across two titles: Building Services Journal and Light & Lighting. In 2005, Brian received the BSIA Chairman’s Award for Promoting The Security Industry and, a year later, the Skills for Security Special Award for an Outstanding Contribution to the Security Business Sector. In 2008, Brian was The Security Institute’s nomination for the Association of Security Consultants’ highly prestigious Imbert Prize and, in 2013, was a nominated finalist for the Institute's George van Schalkwyk Award. An Honorary Fellow of The Security Institute, Brian serves as a Judge for the BSIA’s Security Personnel of the Year Awards and the Securitas Good Customer Award. Between 2008 and 2014, Brian pioneered the use of digital media across the security sector, including webinars and Audio Shows. Brian’s actively involved in 50-plus security groups on LinkedIn and hosts the popular Risk UK Twitter site. Brian is a frequent speaker on the conference circuit. He has organised and chaired conference programmes for both IFSEC International and ASIS International and has been published in the national media. Brian was appointed Editor of Risk UK at Pro-Activ Publications in July 2014 and as Editor of The Paper (Pro-Activ Publications' dedicated business newspaper for security professionals) in September 2015. Brian was appointed Editor of Risk Xtra at Pro-Activ Publications in May 2018.

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