Third-Party Risk Management Market Report Scope & Overview:

Third-Party Risk Management Market was valued at USD 6.91 billion in 2023 and is expected to reach USD 23.23 billion by 2032, growing at a CAGR of 14.48% from 2024-2032. 

This report includes in-depth analysis on automation and AI integration statistics, time-to-risk identification, third-party concentration risk, real-time monitoring and alerts, and budget and spending data. The market is rapidly evolving as organizations prioritize proactive risk mitigation strategies to navigate increasing complexities in vendor ecosystems. Advancements in AI and automation are significantly enhancing the speed and accuracy of threat detection and compliance management. Real-time monitoring tools are gaining traction, allowing continuous oversight of third-party activities. Additionally, rising concerns over third-party concentration risk and the need for transparent budget allocation are driving the demand for comprehensive, scalable solutions that deliver real-time insights and help ensure business continuity across industries.

U.S. Third-Party Risk Management Market was valued at USD 1.89 billion in 2023 and is expected to reach USD 6.29 billion by 2032, growing at a CAGR of 14.32% from 2024-2032. 

This growth is driven by the increasing reliance on external vendors, growing regulatory scrutiny, and the rising frequency of supply chain disruptions and cybersecurity threats. Organizations across sectors are investing in advanced risk management platforms to gain real-time visibility, ensure compliance, and mitigate operational vulnerabilities. The adoption of AI-driven analytics, automation tools, and real-time alert systems is also accelerating as enterprises seek to identify, assess, and respond to risks more efficiently. Additionally, heightened awareness around third-party concentration risk is prompting more strategic and data-driven risk oversight.

Third-Party Risk Management Market Dynamics

Drivers

• Growing reliance on outsourced vendors and increasing complexity of global supply chains boost third-party risk management adoption significantly

Increased use of third-party service providers and more complex global supply chains are forcing organizations to invest in effective third-party risk management (TPRM) solutions. As companies outsource functions like IT, logistics, and customer service, the risk of exposure to regulatory, financial, reputational, and cybersecurity risks has increased significantly. The absence of transparency and control over third-party vendors contributes to these issues, making risk monitoring a central component of business continuity planning. Organizations that do business across several jurisdictions also present varied compliance needs, further emphasizing the need for automated, elastic risk management software. TPRM platforms assist in the reduction of risk assessments, ensuring compliance, and enhancing vendor performance. As business ecosystems grow, the need to manage third-party risks to achieve operational resilience and compliance remains a key driver of market growth.

Restraints

• Limited internal expertise and lack of standardized frameworks reduce effectiveness of third-party risk management implementations

Many organizations struggle to fully utilize third-party risk management systems due to limited internal expertise and standardized implementation frameworks. TPRM demands cross-functional alignment, explicit knowledge of risk categories, and uniform evaluation standards for vendor performance. Yet most enterprises do not have specialized risk management experts or established processes to monitor third-party relationships effectively. Additionally, the lack of generally accepted standards makes it challenging to benchmark risks or assess vendor compliance uniformly. Such inconsistency impedes the identification of key vulnerabilities or prioritization of risks. The inefficiencies that result can cause redundant effort, data silos, and poor decision-making. These operational issues ultimately reduce the return on investment in TPRM tools, thus inhibiting wider adoption across industry verticals.

Opportunities

• Emergence of AI and automation technologies creates opportunities to enhance efficiency and accuracy in third-party risk management operations

The increasing embedment of artificial intelligence (AI) and automation within third-party risk management solutions opens up a considerable opportunity for market expansion. AI-based technologies are able to intensify threat detection by analyzing extensive amounts of data from different sources in real-time, flagging anomalies, and highlighting suspected dangers. Automation is able to improve onboarding velocity, vendor vigilance continuously, and workflow on risk assessments in a seamless way, avoiding errors and augmenting efficiency. These technologies also enable predictive analytics, enabling organizations to handle emerging risks proactively and enhance decision-making. As data-driven TPRM becomes increasingly prevalent, AI and automation can provide scalable solutions for companies of any size, achieving compliance at the same time as lowering operational overhead. Smart TPRM tool evolution is rewriting old ways of working and building a future-proof, risk management environment that proactively resonates with innovative organizations.

Challenges

• Data fragmentation and lack of centralized risk intelligence make it difficult to standardize third-party risk practices across global organizations

Global organizations usually struggle with aggregating third-party risk data because it gets fragmented across business units, departments, and regions. Different methods or tools may be used by each unit to evaluate vendors, leading to inconsistent data quality and redundant efforts. This break-up hinders the establishment of a consolidated risk intelligence framework, and it becomes challenging to get a comprehensive view of third-party exposure. Furthermore, disparate compliance guidelines and regional regulatory frameworks complicate the effort to harmonize TPRM processes geographically. The absence of centralized systems discourages cooperation, slows down decision-making, and undermines the overall risk position of the organization. To meet this problem calls for coordinated TPRM platforms, converged governance templates, and company investment in cross-function data sharing initiatives that tend to be difficult to scale.

Third-Party Risk Management Market Segment Analysis

By Component

Solution segment led the Third-Party Risk Management Market with the maximum revenue share of nearly 62% in 2023 as a result of increasing need for integrated platforms that centralize vendor risk assessment, compliance monitoring, and reporting. Integrated solutions that provide automation, real-time monitoring, and analytics are preferred by organizations to proactively handle third-party risks. Such platforms decrease manual workloads, automate workflows, and assist companies in meeting regulatory requirements effectively. Their ability to scale across enterprise environments positions them as the choice of preference, propelling leadership in the total market share.

The services segment is anticipated to grow at the fastest CAGR of around 15.70% during 2024–2032 due to increasing demand for specialized assistance, including consulting, implementation, risk evaluation, and managed services. As organizations experience mounting compliance pressures and sophisticated third-party networks, they are seeking outside expertise to expedite deployment and increase efficiency. Outsourced offerings allow companies to leverage domain expertise, lower internal pressures, and remain up to date on regulatory changes, fueling the fast growth of this space.

By Deployment Mode

Cloud segment dominated the Third-Party Risk Management Market with the highest revenue share of about 63% in 2023 due to increased adoption of cloud-based platforms offering flexibility, scalability, and lower upfront investment. Businesses are favoring cloud deployments for their ability to provide real-time updates, remote access, and seamless integration with other enterprise systems. Additionally, cloud platforms support continuous monitoring and faster response to emerging threats. Their ease of deployment and cost-efficiency have made them the preferred option for modern risk management strategies.

On-premises segment will expand at the fastest CAGR of roughly 15.76% between 2024–2032 because of increasing concern regarding data privacy, internal control, and compliance with regulations in sensitive sectors. Organizations dealing with sensitive data opt for on-premises deployment so as to have complete ownership and reduce exposure to outside breaches. Verticals like finance, defense, and government still prefer the use of in-house infrastructure for enhanced security and tailor-made configurations. These requirements for increased control and compliance guarantees are driving the on-premises segment's growth.

By Organization Size

Large Enterprises segment held the largest market share of nearly 68% in 2023 as these entities deal with sophisticated vendor environments and have stringent regulation requirements. Their worldwide business requires sophisticated TPRM systems to track, evaluate, and manage risk from various third parties. Big business possesses the monetary and technological capacity to install secure risk management solutions, rendering them the early adopters. Their exposure and necessity for enterprise-grade compliance spur sustained market dominance.

SMEs segment will grow at the fastest CAGR of around 15.68% from 2024–2032 as a result of growing awareness of third-party vulnerabilities and escalating regulatory oversight. With digital transformation spreading across smaller enterprises, there is an emerging need to protect data and provide vendor accountability. Cloud-based and modular TPRM solutions are increasingly available and affordable for SMEs, which will allow them to effectively deal with risks without significant investments. This change is hastening TPRM adoption in the small and mid-sized enterprise landscape.

By Vertical

BFSI segment dominated the Third-Party Risk Management Market with the highest revenue share of about 26% in 2023 due to its high exposure to cyber threats, data breaches, and regulatory scrutiny. Financial institutions depend heavily on third-party service providers, necessitating robust risk management frameworks. Compliance mandates such as Basel III and GDPR further require extensive vendor due diligence and monitoring. The sector’s demand for secure, transparent, and compliant operations has made it the largest consumer of TPRM solutions globally.

Healthcare and Life Sciences segment is expected to grow at the fastest CAGR of about 17.90% from 2024–2032 driven by increasing digitalization, third-party collaborations, and growing cybersecurity threats. As healthcare providers integrate telemedicine, digital health platforms, and outsourced services, managing data privacy and compliance becomes critical. Regulations like HIPAA and GDPR require continuous oversight of third-party vendors handling patient data. The need to protect sensitive information and maintain operational integrity is prompting rapid adoption of TPRM tools in this sector.

Regional Analysis

North America dominated the Third-Party Risk Management Market with the highest revenue share of about 38% in 2023 due to the region’s mature regulatory landscape, early adoption of advanced risk management technologies, and high concentration of large enterprises. Organizations across sectors such as BFSI, healthcare, and IT are mandated to comply with stringent data protection and risk governance standards, driving demand for robust TPRM solutions. The presence of leading solution providers and growing cybersecurity concerns further support the region’s continued market leadership.

Asia Pacific is expected to grow at the fastest CAGR of about 16.53% from 2024–2032 due to rapid digital transformation, expanding outsourcing practices, and increasing regulatory enforcement across emerging economies. Businesses in countries like China, India, and Southeast Asia are adopting third-party services at a significant pace, raising the need for effective risk monitoring tools. Growing awareness about vendor-related cyber threats and compliance obligations is accelerating the demand for scalable, cloud-based TPRM solutions across the region.

Third-Party Risk Management Market Key Players

• Aravo Solutions, Inc. (Aravo for Third Party Management, Risk & Performance Management)

• BitSight Technologies, Inc. (Security Ratings, Third-Party Risk Management)

• Deloitte Touche Tohmatsu Limited (Risk Intelligence, Third-Party Risk Services)

• Ernst & Young Global Limited (Third-Party Risk Management Suite, Risk Navigator)

• Genpact (TPRM Services, Risk Canvas)

• MetricStream (Third-Party Risk Management, Business Continuity Management)

• NAVEX Global, Inc. (RiskRate, NAVEX One)

• PwC (Third-Party Risk Management Framework, Third-Party Risk Assessment Tool)

• RSA Security LLC (RSA Archer Third Party Governance, RSA Archer Risk Register)

• Venminder, Inc (Venminder Platform, Vendor Risk Management)

• KPMG (Third-Party Risk Assessment Tool, TPRM Services)

• ProcessUnity (Vendor Risk Management, Risk Assessment Automation)

• Resolver (Third-Party Risk Management, Resolver Core Risk Management)

• Riskpro (TPRM Platform, Risk Assessment Suite)

• SAI Global (Risk Management Cloud, Vendor Risk Manager)

• RapidRatings (Financial Health Rating, Risk Management Platform)

• Optiv (Third-Party Risk Services, Risk Transformation Services)

• OneTrust (Third-Party Risk Exchange, Vendorpedia)

• Galvanize (Third-Party Risk Management, HighBond Platform)

Recent Developments:

• 2024 – Bitsight launched the industry’s first fully integrated Third-Party Risk Management solution, combining Vendor Risk Management and Continuous Monitoring to help enterprises combat rising software supply chain threats and regulatory pressures.

• 2023 – Aravo expanded adoption of its Third-Party Risk Management platform among pharmaceutical and life sciences firms, helping mitigate supply chain disruptions, performance issues, and anti-bribery risks with data-driven, automated solutions.