Third Party Risk Management Market Size - By Component (Solution, Services), Application (Supply Chain Management, IT & Cybersecurity, Financial Services, BPO), Industry, Growth Prospects, Regional Outlook & Global Forecast, 2024 – 2032

Third Party Risk Management Market Size - By Component (Solution, Services), Application (Supply Chain Management, IT & Cybersecurity, Financial Services, BPO), Industry, Growth Prospects, Regional Outlook & Global Forecast, 2024 – 2032

Third Party Risk Management Market Size

Third Party Risk Management Market size was valued at USD 6 billion in 2023 and is anticipated to register a CAGR of over 15% between 2024 and 2032. The escalating frequency and sophistication of cyberattacks have raised concerns about data breaches and security vulnerabilities across organizations. As businesses increasingly rely on third-party vendors and partners, the risk of cyber threats through these external connections has grown.

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Third-party risk management solutions help organizations assess and mitigate the cybersecurity risks associated with their vendor ecosystem. Against this backdrop, new and established players in this space are collaborating to provide enhanced risk management to their clients, creating a favourable growth outlook for the third-party risk management market.
 

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Quoting an instance, in July 2023, ProcessUnity Inc. and CyberGRX Inc. announced their merger, forming a comprehensive software and data platform focused on improving the identification, assessment, analysis, and reduction of risks in clients' ecosystems. The merged entity aims to provide a top-tier Third-Party Risk Management (TPRM) workflow platform combined with the world's largest global cyber risk exchange.

This integration is designed to centralize and standardize vendor risk management, addressing significant risks like third-party and cybersecurity threats. The goal is to bring together procurement and cybersecurity teams, along with external service providers, to collectively reduce internal cyber risk and external third-party risk while facilitating the adoption of new products and services.

Regulatory compliance requirements will help strengthen the third-party risk management market forecast through 2032. Governments and regulatory bodies have introduced stringent data protection and privacy regulations.

For instance, in August 2023, the President of India approved The Digital Personal Data Protection Act (DPDPA) after it received endorsement from both houses of the Indian Parliament. Marking the inception of India's inaugural privacy legislation, this Act is crafted to empower individuals, referred to as Data Principals in DPDPAA, by affirming their right to privacy.

The legislation oversees the handling of digital personal data, recognizing the dual aspects of individuals' authority over their personal information and organizations' legitimate objectives for data processing. In compliance with DPDPAA, enterprises acting as Data Fiduciaries in determining data collection and processing purposes may engage Data Processors (DPs) or Third-Party Service Providers (TSPs) for processing personal data on their behalf. This intersection underscores the relevance of DPDPA in the realm of third-party risk management.

Organizations are required to ensure that their third-party vendors comply with these regulations. Third-party risk management solutions help companies maintain compliance by managing and monitoring the activities of their vendors, thus supporting third-party risk management market growth and expansion.

That being said, adequate resource allocation, including financial resources, skilled personnel, and time, is essential for effective third-party risk management. Some organizations may face constraints in terms of budgetary limitations or a shortage of skilled professionals who can design, implement, and oversee comprehensive TPRM programs. Insufficient resources may hinder the ability of organizations to invest in and sustain robust risk management practices for their third-party relationships.

Third Party Risk Management Market Trends

Focus on continuous monitoring and dynamic risk assessment could emerge as a prominent trend across the third party risk management industry. Traditionally, risk assessments in TPRM have often been periodic and point-in-time. However, an upcoming trend could involve a shift towards continuous monitoring and dynamic risk assessments. This approach enables organizations to stay vigilant in real-time, promptly identifying and addressing emerging risks in their third-party relationships.

Continuous monitoring can involve the use of tools that provide ongoing visibility into vendor activities, security postures, and compliance status. By seamlessly integrating external risks with internal risk profiles, this holistic approach ensures a unified and transparent perspective on potential exposures across the organization, facilitating effective and efficient third-party risk management.

In this regard, in December 2023, Drata, a renowned continuous security and compliance automation platform, unveiled its Third-Party Risk Management (TPRM) solution. This empowers users to centralize the identification, evaluation, and monitoring of third-party risks within an integrated platform. Drata's TPRM offering is equipped with various enhancements, providing security teams with a robust tool to identify, assess, and continually monitor risks comprehensively.

Third Party Risk Management Market Analysis

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Based on application, the IT & cybersecurity segment accounted for 31% of the market share in 2023, driven by the increasing complexity of global business ecosystems. As organizations collaborate with numerous external partners, vendors, and service providers, the potential for cybersecurity threats and data breaches rises. Heightened regulatory scrutiny and compliance requirements also contribute to the need for robust risk management. Organizations seek third-party risk management solutions to assess, monitor, and mitigate risks associated with their extended network, ensuring data security, regulatory compliance, and operational resilience in an environment where the interconnectedness of business relationships is expanding rapidly.

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Based on component, the solution segment held around 57% of the third-party risk management market share in 2023, favoured by the escalating frequency and sophistication of cyber threats. As businesses increasingly rely on external vendors and services, the potential for security vulnerabilities rises. Stringent data protection regulations amplify the need for compliance, making organizations prioritize robust risk management practices.

Third-party risk management helps mitigate the inherent cybersecurity risks associated with external collaborations, ensuring a proactive approach to identifying, assessing, and managing potential threats. This adoption is further driven by the imperative to safeguard sensitive data and maintain the integrity of IT systems in an ever-evolving threat landscape.

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North America third party risk management market recorded 34% of the revenue share in 2023. The increasing complexity of supply chains and business ecosystems demands robust risk mitigation strategies. The region's stringent regulatory environment, with a focus on data protection and privacy laws, compels organizations to invest in comprehensive risk management solutions.

Additionally, the escalating frequency and sophistication of cyber threats necessitate heightened vigilance. As businesses expand their networks of vendors and partners, the need to ensure regulatory compliance, data security, and operational resilience becomes paramount, driving the sustained growth of the third-party risk management industry in North America.

Third Party Risk Management Market Share

KPMG and Deloitte hold around 9% of the total market share, as these companies adopt several key strategies to enhance their competitive positions. First, strategic partnerships and collaborations are common, allowing companies to integrate complementary technologies and broaden their service offerings. These partnerships often aim to provide clients with comprehensive solutions that cover various aspects of TPRM. Continuous innovation and the incorporation of advanced technologies, such as artificial intelligence and machine learning, are vital. Companies strive to offer cutting-edge solutions that can efficiently identify, assess, and mitigate risks in real time, staying ahead of evolving threats.

Expanding global reach through geographic expansions and acquisitions is a prevalent strategy. This helps companies tap into new markets and diversify their clientele, strengthening their overall market presence. Moreover, a customer-centric approach, emphasizing user-friendly interfaces and customizable solutions, is crucial for client satisfaction and retention. Finally, adherence to regulatory standards and certifications enhances credibility, fostering trust among clients and regulatory bodies alike. Overall, a combination of innovation, collaboration, expansion, and client-focused strategies contributes to companies solidifying their positions in the competitive TPRM market.

Third Party Risk Management Market Companies

Major companies operating in the third-party risk management industry are

• BitSight Technologies, Inc.
• Deloitte Touche Tohmatsu Limited
• Ernst & Young Global Limited
• Genpact
• KPMG International Limited
• MetricStream
• NAVEX Global, Inc.
• ProcessUnity, Inc.
• PwC
• Resolver Inc.

Third Party Risk Management Industry News

• In January 2024, BitSight, a frontrunner in cyber risk management, introduced two enhancements to its growing Third-Party Risk Management lineup. These additions empower enterprises to efficiently recognize, prioritize, and address risks. The Vendor Discovery feature automatically detects third-party relationships within an organization, offering instant visibility into potentially unidentified and unauthorized vendors.
• In December 2023, KPMG in India and Lineaje Inc. unveiled a strategic alliance geared toward delivering comprehensive solutions for organizations, offering enhanced visibility and control over their software supply chain. Leveraging Lineaje's proficiency in software supply chain security management, in line with KPMG in India's extensive capabilities, the alliance aims to assist organizations in the transformation and revitalization of their third-party risk management programs.

The third-party risk management market research report includes in-depth coverage of the industry, with estimates & forecast in terms of revenue (USD Billion) from 2018 to 2032, for the following segments

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Market, By Component

• Solutions
  • Financial control management
  • Contract management
  • Operational risk management
  • Audit management
  • Compliance management
  • Others
• Services
  • Professional
  • Managed

Market, By Application

• Supply chain management
• IT & cybersecurity
• Financial services
• BPO
• Others

Market, By Industry

• BFSI
• IT and Telecom
• Healthcare and life science
• Government, defense, and aerospace
• Retail and consumer goods
• Manufacturing
• Energy and utilities
• Others

The above information has been provided for the following regions and countries

• North America
  • U.S.
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Italy
  • Spain
  • Russia
  • Rest of Europe
• Asia Pacific
  • China
  • India
  • Japan
  • South Korea
  • Australia
  • Southeast Asia
  • Rest of Asia Pacific 
• Latin America
  • Brazil
  • Mexico
  • Argentina
  • Rest of Latin America 
• MEA
  • UAE
  • South Africa
  • Saudi Arabia
  • Rest of MEA

Frequently Asked Questions (FAQ)

How big is the third party risk management market?

The market size of third party risk management reached USD 6 billion in 2023 and is set to observe 15% CAGR from 2024 to 2032, owing to escalating frequency and sophistication of cyberattacks leading to rising concerns about data breaches and security vulnerabilities worldwide.

Why is the third party risk management industry growing from IT & cybersecurity?

The IT & cybersecurity application segment accounted for 31% of the market share in 2023, due to the increasing complexity of global business ecosystems.

What factors are influencing third party risk management market growth in North America?

North America held over 34% of the market share in 2023, due to increasing complexity of supply chains and business ecosystems demands in the region.