Enterprise Governance, Risk and Compliance Market

Market Overview

The global enterprise governance risk and compliance market size was valued at USD 45.37 billion in 2022. It is estimated to reach USD 138.47 billion by 2031, growing at a CAGR of 13.2% during the forecast period (2023–2031). The stringent regulations and policies to monitor business activities, the dynamic regulatory environment and growing digital volumes stimulate market growth.

Enterprise Governance, Risk, and Compliance is a comprehensive framework organizations employ to manage governance, risk management, and compliance activities effectively. It provides a structured approach to ensure that the organization operates responsibly, ethically, and competently. The governance aspect of EGRC focuses on establishing robust structures and processes for decision-making, accountability, and transparency. It involves defining roles and responsibilities, setting strategic objectives, and establishing policies and procedures to guide operations. Organizations can ensure effective leadership, efficient decision-making, and transparent reporting with a clear governance framework.

Risk management is a critical component of EGRC, aiming to identify, assess, and mitigate risks that could impact an organization's objectives. By implementing risk management practices, organizations can proactively identify potential risks, evaluate their potential impact, and develop strategies to mitigate or respond to them effectively. This helps protect the organization from financial, operational, reputational, and compliance risks. Compliance is another vital element of EGRC, encompassing adherence to laws, regulations, industry standards, and internal policies. Organizations must comply with various legal and regulatory requirements specific to their industry. EGRC frameworks help organizations monitor and ensure compliance by establishing processes for internal audits, implementing internal controls, and reporting on compliance status. Compliance activities help mitigate legal and regulatory risks while fostering an ethical and responsible organizational culture.

Market Dynamics

Market Drivers

Stringent Regulation and Policies to Monitor Business Activities

Stringent regulations imposed by regulatory bodies across the countries to counter money laundering activities and detect fraudulent transactions are emerging among the major factors driving market growth. In the U.S., anti-money laundering policies require financial institutions to file reports regarding their completed transactions and clients. Similarly, transactions exceeding USD 10,000 need to be accompanied by a specific set of paperwork to ensure that the transactions are recorded and further evaluated.

On the other hand, if a trade not exceeding is found suspicious, bank employees are expected to file a suspicious activity report (SAR) against the same. eGRC tools can be very useful in preparing documentation and filing reports related to financial and trading transactions. Also, the introduction of GDPR law in Europe for data privacy has put the responsibility on companies to understand the usage of personal and professional information in business.

Dynamic Regulatory Environment and Growing Digital Volumes

The emergence of the latest technologies, like the Internet of Things, big data, machine learning, AI, and blockchain, coupled with continued digitization, has led to the introduction of new digital frameworks, thereby triggering the need to modify the business processes accordingly and to upgrade the incumbent GRC software. GRC vendors are responding to the dynamic situation by leveraging technological advances to develop advanced eGRC solutions capable of categorizing and processing data for compliance purposes. The latest eGRC solutions allow institutions to obtain a holistic view of the structured and unstructured enterprise data and initiate relevant actions.

Market Restraints

Complexity and Implementation Challenges

Implementing an EGRC system can be complex for organizations, particularly larger enterprises with multiple business units and diverse regulatory requirements. The complexity arises from integrating various systems, data sources, and processes into a unified EGRC framework. One of the primary challenges is ensuring the seamless integration of different systems within the organization. Enterprises often have existing systems and software applications that handle specific data governance, risk management, and compliance functions. Integrating these disparate systems into a cohesive EGRC framework requires careful planning, coordination, and technical expertise. It may involve consolidating data from different sources, ensuring data consistency and integrity, and establishing data flows between systems.

Market Opportunity

Need for Continuous Software Upgrades in Line with Changing Regulations

Businesses are operating in highly complex and dynamic regulatory environments, where staying updated with the latest trends in the industry and regulatory changes and aligning the organizational business processes are turning out to be among the most significant challenges being faced by GRC management strategists. While businesses are finding it hard to gauge their compliance and risk postures, avoid any security lapses, strengthen their compliance and risk management, effectively roll out governance programs, and accordingly align their business goals, the dynamic regulatory scenario and the continued modifications to the policies and introduction of new rules are challenging eGRC vendors to stay updated with the dynamic scenario and upgrade their eGRC tools frequently.

Regional Analysis

Based on region, the global enterprise governance risk and compliance market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

North America's enterprise governance risk and compliance market share is estimated to grow at a CAGR of 11.7% over the forecast period. The dominance of North America in the EGRC market can be attributed to several factors. Firstly, the region has a strong presence of large enterprises across various industries, including banking, finance, healthcare, technology, and manufacturing. These industries face complex regulatory requirements and are subject to stringent governance and compliance standards. As a result, there is a growing demand for EGRC solutions to ensure regulatory compliance, mitigate risks, and enhance corporate governance practices.

Secondly, North America has been at the forefront of technological advancements, and organizations in the region are quick to adopt innovative solutions to improve their business operations. EGRC software and services enable organizations to automate and streamline their governance, risk management, and compliance processes, improving operational efficiency and reducing compliance costs.

Europe is anticipated to exhibit a CAGR of 12.5% over the forecast period. Several factors contribute to the anticipated growth in the European EGRC market. Firstly, European countries have well-established regulatory frameworks and compliance standards across various industries. This includes banking, finance, healthcare, manufacturing, and energy sectors. The focus on regulatory compliance and risk management drives the demand for EGRC solutions to help organizations navigate complex regulatory landscapes, ensure compliance, and mitigate risks effectively.

Additionally, European organizations increasingly recognize the importance of good corporate governance practices and robust risk management frameworks. Implementing EGRC solutions enables organizations to streamline their governance processes, enhance risk assessment capabilities, and establish effective compliance mechanisms. These solutions provide a holistic view of governance, risk, and compliance, enabling organizations to make informed decisions and proactively address emerging risks.

In the Asia Pacific region, the enterprise governance risk and compliance (EGRC) market is expected to exhibit significant growth with a projected Compound Annual Growth Rate (CAGR) over the forecast period. Asia Pacific is a diverse region with a rapidly evolving business landscape and increasing regulatory scrutiny, driving the demand for EGRC solutions. The region is experiencing robust economic growth, accompanied by the expansion of businesses and increased investments. This growth necessitates effective governance and risk management practices to ensure operational efficiency, regulation compliance, and protection against emerging risks.

The enterprise governance risk and compliance market in Latin America is expected to grow with a projected CAGR over the forecast period. Latin America is characterized by a diverse business landscape, emerging economies, and evolving regulatory frameworks, driving the demand for EGRC solutions. The region increasingly focuses on strengthening corporate governance practices and risk management frameworks. Governments and regulatory bodies are implementing measures to enhance transparency, accountability, and compliance standards across various industries. EGRC solutions play a crucial role in assisting organizations to align with these regulatory requirements and establish robust governance and risk management practices.

In the Middle East and Africa region, the enterprise governance risk and compliance market is forecasted to grow with a projected CAGR over the forecast period. MEA is a diverse region comprising various countries with unique business environments and regulatory landscapes, driving the demand for EGRC solutions. The region is witnessing rapid economic development, with significant investments in infrastructure, construction, and various industries. This growth necessitates effective governance and risk management practices to ensure operational efficiency, regulatory compliance, and sustainable business growth.

Segmental Analysis

The global enterprise governance risk and compliance market is bifurcated into components, software, services, enterprise, and vertical.

Based on components, the global enterprise governance risk and compliance market is bifurcated into software and services. 

The software segment dominates the global market and is projected to exhibit a CAGR of 13.9% over the forecast period. The global enterprise governance risk and compliance market is divided into software and services based on the components. The software segment is the dominant segment in the market and is expected to experience significant growth. The software segment encompasses various EGRC solutions to automate and streamline governance, risk management, and compliance processes. These software solutions offer functionalities such as risk assessment, policy management, incident reporting, audit management, and regulatory tracking. They provide organizations with the tools and capabilities to manage their governance, risk, and compliance requirements effectively.

Based on software, the global enterprise governance risk and compliance market is bifurcated into audit management, compliance management, risk management, policy management, incident management, and others. 

The audit management segment dominates the global market and is projected to exhibit a CAGR of 13.7% over the forecast period. Audit management software provides organizations with tools and capabilities to streamline and automate audit processes. It enables efficient planning, scheduling, and execution of audits and facilitates tracking audit findings, recommendations, and corrective actions. Audit management software also helps generate comprehensive reports and ensure compliance with auditing standards and regulatory requirements. The audit management segment dominates the global EGRC market and is expected to grow significantly.

Audit management software solutions enable organizations to streamline their audit processes, enhance risk assessment, and ensure compliance with auditing standards and regulations. With the increasing focus on internal controls and regulatory compliance, the demand for audit management software is likely to continue to grow in the foreseeable future.

Based on services, the global enterprise governance risk and compliance market is bifurcated into integration, consulting, and support. 

The integration segment dominates the global market and is projected to exhibit a CAGR of 12.8% over the forecast period. The integration services in the EGRC market involve the seamless integration of EGRC software solutions into an organization's existing systems and processes. This includes integrating different data sources, configuring workflows, and ensuring interoperability between various components of the EGRC system. Integration services play a critical role in enabling organizations to leverage the full potential of EGRC software and ensure smooth data flows and communication across the organization. The dominance of the integration segment can be attributed to the complexity of implementing EGRC solutions.

Many organizations have diverse systems, databases, and processes that must be integrated into a unified EGRC framework. Integration services help organizations overcome the challenges associated with system integration, data consolidation, and process alignment.

Based on the enterprise, the global enterprise governance risk and compliance market is bifurcated into small and medium enterprises (SMEs) and large enterprises. 

The small and medium enterprises segment dominates the global market and is projected to exhibit a CAGR of 13.1% over the forecast period. Small and medium enterprises typically have unique governance, risk management, and compliance requirements compared to large enterprises. They may have limited resources, fewer dedicated compliance staff, and less complex organizational structures. However, SMEs increasingly recognize the importance of effective governance, risk management, and compliance practices to ensure operational efficiency, mitigate risks, and maintain regulatory compliance. The dominance of the SME segment can be attributed to several factors.

Moreover, SMEs increasingly adopt EGRC solutions to streamline their governance, risk management, and compliance processes. EGRC software provides SMEs with affordable and scalable solutions tailored to their needs. These solutions help SMEs automate manual processes, improve efficiency, and ensure compliance with applicable regulations.

Based on the vertical, the global enterprise governance risk and compliance market is bifurcated into BFSI, construction and engineering, energy and utilities, government, healthcare, manufacturing, retail and consumer goods, telecom and IT, transportation and logistics, and others. 

The BFSI segment dominates the global market and is projected to exhibit a CAGR of 12.5% over the forecast period. The dominance of the BFSI segment can be attributed to several factors. First, the BFSI industry operates in a highly regulated environment, with stringent compliance requirements related to financial regulations, data security, and customer privacy. EGRC solutions play a critical role in helping BFSI organizations navigate complex regulatory frameworks, ensure compliance, and mitigate operational risks.

Furthermore, the BFSI industry faces unique governance challenges due to its intricate organizational structures, multiple business units, and global operations. EGRC solutions provide centralized governance frameworks that help BFSI organizations streamline their governance processes, establish effective risk management practices, and ensure compliance across various divisions and geographies.

Recent Developments

• March 2023-IBM announced the acquisition of Resilient Systems, a provider of eGRC software. The acquisition will help IBM to expand its eGRC offerings and provide customers with a more comprehensive solution.
• January 2023-MetricStream announced the release of its new eGRC solution. The solution is designed to help businesses improve their compliance with various regulations, including GDPR, CCPA, and PCI DSS.