Risk and regulatory work is now officially the fastest-growing consulting service in the UK. Helping today’s organisations comply with the law, address cyber threats and manage the fall-out from unfortunate corporate episodes has led to double-digit growth in risk and regulatory-centric consulting, the value of which reached a grand total of just over £500 million for 2015.
Detailed analysis conducted by Source Global Research has also found that the ‘Big Four’ advisory firms are well situated to win contracts in this sphere. Apparently, those ‘big names’ carry much weight with the regulators, which is one major reason why they continue to dominate the risk consulting sector.
Risk-focused work has a much wider reach than just regulatory compliance, though. The Volkswagen emissions scandal and the ongoing fall-out from the much-publicised TalkTalk hacking episode are two recent occurrences in ‘Blue Chip Land’ that have helped to place reputational risk front of mind for many clients.
Further, the Source report notes that social media renders any wrong moves in the area of risk management far costlier than they once were as bad news can ‘go viral’ in a matter of seconds.
The detailed document finds that cyber security is now exerting a huge impact on risk consulting, with some businesses informing Source they achieved no less than 40% growth for advising in this realm last year. Such work is high-profile, of course, and inevitably touches on all areas of an organisation.
Those traditional verticals with a heavy regulatory burden, such as financial services and pharmaceuticals, are driving much compliance work just now. However, the Source report does point out that, although regulation underpins consulting firms’ revenues in the financial services world, it’s now starting to be somewhat “less of a cash cow”. Levels of pure regulatory work are gradually receding as regulation volumes begin to fall and the embattled banks slowly emerge from the post-crisis compliance pressures heaped upon them.
The shift away from huge volumes of pure compliance work threatens to hit the ‘Big Four’ firms the hardest, but there’s a fair chance that an uptick in cyber criminality would help fill this gap.
Focusing specifically on the latter issue, Stephen Vinnicombe (UK CEO at the Capco consultancy) 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 evolves. You cannot apply a single solution and be confident that you’ve fully taken care of matters.” That’s a truism well worth bearing in mind.
Fiona Czerniawska, director and founder of Source Global Research, concluded: “Consulting firms are eager to invest in risk and regulatory matters in order to take advantage of all the business 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 other factors.”
That said, with no reason to suggest that positive developments in risk and regulatory consulting demand will be halted in their tracks any time soon, Source Global Research expects 2016 to be “another good year” for business volumes.
Sound advice on matters of risk will never go out of fashion.