Vendor Risk Management Market By Component (Solutions, Services), By Deployment Type (On-premises, Cloud), By Enterprise Size (Small and Medium Enterprises (SMEs), Large Enterprises), By Vertical (Banking, Financial Services and Insurance (BFSI), Telecom and IT, Consumer Goods and Retail, Healthcare

Vendor Risk Management Market Valuation – 2024-2031

Vendor Risk Management (VRM) solutions help businesses manage and minimize risks related to their connections with third parties in the quickly changing business environment. According to the analyst from Market Research, the Vendor Risk Management Market is estimated to reach a valuation of USD 23.97 Billion by 2031 over the forecast, subjugating the revenue of USD 7.99 Billion valued in 2023.

The increasing frequency and sophistication of cyber threats are driving the adoption of vendor risk management solutions to improve resilience and safeguard enterprises from potential third-party security issues. It enables the market to grow at a CAGR of 14.73% from 2024 to 2031.

Vendor Risk Management MarketDefinition/ Overview

Vendor risk management (VRM) is a systematic approach to identifying, assessing, and reducing risks posed by third-party vendors and suppliers. Its major goal is to ensure that enterprises can successfully manage and mitigate possible interruptions, vulnerabilities, and security threats posed by third parties in their supply chain. VRM entails analyzing vendors’ security procedures, compliance adherence, and overall risk posture to protect sensitive information and ensure operational continuity.

Furthermore, this process plays an important role in several industries, including banking, healthcare, and technology, where firms rely substantially on external relationships and services. By deploying VRM, businesses proactively address and reduce possible risks, resulting in a more secure and resilient corporate environment.

What are the Factors that Surge the Demand for the Vendor Risk Management Market?

The frequency and sophistication of cyber threats have increased to unprecedented levels in recent years, affecting the global corporate ecosystem. The pervasiveness of these threats ranging from data breaches to ransomware attacks is compelling businesses to rethink and reinforce their cybersecurity procedures. As a result of recognizing that third-party relationships can be used by cyber adversaries, businesses are increasingly turning to Vendor Risk Management (VRM) solutions. These products play an important role in strengthening enterprises against growing cyber threats that originate from their broad vendor network, hence driving the demand for vendor risk management solutions.

Businesses have expanded into worldwide marketplaces, resulting in increasingly complex and interwoven supply chains. While globalization provides various benefits, it also poses a variety of concerns, particularly in terms of cybersecurity. Therefore, vendor risk management solutions allow companies to maintain awareness and control over possible hazards connected with this complex web of partnerships and result in the overall growth of the market.

Furthermore, vendor risk management solutions serve as a proactive defense mechanism, allowing enterprises to identify and reduce risks that disrupt operational continuity. By improving operational resilience, VRM contributes to the development of a robust and adaptable company ecosystem capable of overcoming a variety of obstacles.

Which Factors Hinder the Growth of the Vendor Risk Management Market?

Successful VRM depends largely on vendor cooperation and transparency. However, in other circumstances, providers may be reluctant to provide complete information about their security measures. This hesitation originates from concerns about disclosing sensitive information or a lack of knowledge of the necessity of open communication in creating a secure business ecosystem, and it is a major barrier in the Vendor Risk Management Market.

Furthermore, while technology is an important enabler for VRM, relying too much on automated solutions that lack human control proves problematic. The interpretation of complicated risk data and the contextual understanding of vendor relationships demand a human touch that automated solutions might lack, serving as a barrier or the expansion of the Vendor Risk Management Market.

Category-Wise Acumens

How does the Increasing Adoption of Solutions Impact the Growth of the Market?

According to analysis, the solutions segment is estimated to hold a major share in the Vendor Risk Management Market during the forecast period. The advanced technology integrated management solutions in compliance with the regulations facilitate proactive risk management. The increasing prominence of this segment is due to organizations’ growing realization of the necessity for comprehensive and integrated tools to manage the complex web of risks connected with third-party partnerships.

Compliance with industry standards and government laws demands a systematic, technologically advanced approach to risk management. This is achieved through the VRM solutions which helps in entire governance and risk management frameworks of the enterprises. The adaptability and scalability of these solutions enable firms to modify their risk management strategies to unique regulatory needs, enabling the solutions component dominate the market.

Furthermore, the solutions prominence is enhanced by the ongoing evolution and invention of technology. Artificial intelligence (AI) and machine learning (ML) are increasingly being integrated into VRM solutions to improve predictive analytics and real-time threat identification. This technological integration improves the proactive aspect of risk management, allowing companies to keep ahead of developing hazards.

How will Large Enterprises Maintain their Dominance in the Vendor Risk Management Market?

The large enterprises segment is estimated to dominate the Vendor Risk Management Market during the forecast period. Large enterprises’ proactive approach to managing vendor-related risks not only protects their interests but also helps to mature and evolve the VRM market, establishing it as a dominant segment of modern risk management strategy.

Large companies require sophisticated VRM technologies that can handle the complexities of maintaining vendor relationships across multiple regions and industries. These firms deal with a large ecosystem of suppliers, making it important to have comprehensive risk assessment systems in place. As a result, VRM systems provide the scalability and flexibility required to meet the different needs of major companies, allowing them to easily react to changing threats and business conditions.

Furthermore, due to their extensive worldwide operations and complex supply chains, large businesses are more vulnerable to a variety of risks, such as operational disruptions, cybersecurity threats, and compliance issues. As a result, adopting comprehensive VRM solutions is no longer a choice, but a duty for these businesses as they seek to protect their valuable assets, preserve operational continuity, and comply with severe regulatory requirements.

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Country/Region-wise Acumens

Will Strict Regulatory Environment Boost the Demand for VRM in North America?

According to analyst, North America is estimated to dominate the Vendor Risk Management Market during the forecast period. This growth is attributable to the stringent regulatory environment brought to effect to tackle increasing incidence of cybersecurity threats. This demand for technological innovation and early adoption is boosting the sales of vendor risk management solutions.

Growing awareness regarding impact on the environment is propelling the demand for application of VRM in various industries, driving the market in the region. The United States continues to be at the forefront of developing rigorous data protection and cybersecurity regulations. This regulatory landscape encourages firms, particularly in banking and healthcare, to invest heavily in VRM systems to ensure compliance with these regulatory frameworks and fuel its dominance in this region.

Furthermore, North America’s dominance is largely due to the coordinated efforts of the public and private sectors. Governments and industry associations actively promote cybersecurity measures, helping and directing businesses in minimizing vendor risks. This collaborative approach promotes the growth of the VRM market by sharing insights and best practices, which contribute to the region’s leadership in the Vendor Risk Management Market.

Will the VRM Market Grow in Asia Pacific Over the Forecast Period?

Asia Pacific region is estimated to be the most opportunistic region for the Vendor Risk Management Market during the forecast period. Asia Pacific is seeing unprecedented growth, owing to rapid economic expansion, increased awareness of cybersecurity threats, robust digital transformation programs, and proactive government cybersecurity measures.

The region is at the forefront of digital transformation activities, with businesses actively adopting innovative technology to boost efficiency and competitiveness. Vendor risk management solutions, which can identify and reduce risks associated with third-party partnerships, are perfectly aligned with Asia Pacific’s digitalization aspirations. These solutions help to ensure the secure and resilient integration of digital technology into corporate activities, resulting in a forward-thinking and technologically sophisticated business environment in this region.

Furthermore, Asia Pacific is witnessing an increase in cross-border business activities as companies push to expand into new markets and capitalize on global opportunities. This growth into international markets demands robust vendor risk management solutions to mitigate the risks associated with diversified and geographically distributed vendor networks.

Competitive Landscape

The Vendor Risk Management Market is characterized by fierce competition as businesses seek robust solutions to limit the risks associated with third-party interactions. Industry participants are working to provide comprehensive systems that include improved risk assessment, monitoring, and remediation capabilities. As firms prioritize vendor risk management as a strategic imperative, competitive dynamics in this market are expected to remain fluid and sensitive to changing cybersecurity issues.

Some of the prominent players operating in the Vendor Risk Management Market include

SAP Ariba, Oracle GRC, Deloitte, PwC, EY, KPMG, Accenture, IBM Security, Rapid7, McAfee, Cisco Security, Palo Alto Networks, Fortinet, Crowdstrike, Qualys, CyberArk, SailPoint, Ping Identity, Axis Security, AppGuard.

Latest Developments

• In October 2023, Rapid7 announced the purchase of Albedo Security, a top provider of AI-powered supplier risk management solutions. This move enhances Rapid7’s VRM offerings, particularly third-party security posture assessment and continuous monitoring.
• In October 2023, SAP Ariba unveiled a new tool in its procurement platform that uses AI and machine learning to rate vendors based on their security posture, financial stability, and other risk indicators. This is intended to streamline vendor selection and reduce potential risks.
• In October 2023, Accenture acquired Penumbra, a prominent AI-powered supply chain risk management start-up, to enhance its risk assessment and mitigation capabilities for vendor ecosystems. This move reflects the increased emphasis on AI and technology in VRM solutions.

Report Scope

Vendor Risk Management Market, By Category

Component

• Solutions
• Vendor Information Management
• Contract Management
• Financial Control
• Compliance Management
• Audit Management
• Quality Assurance Management
• Services
• Professional Services
• Managed Services

Deployment Type

• On-Premises
• Cloud

Enterprise Size

• Small and Medium Enterprises (SMEs)
• Large Enterprises

Vertical

• Financial Services and Insurance (BFSI)
• Telecom and IT
• Consumer Goods and Retail
• Healthcare and Life Sciences
• Manufacturing
• Energy and Utilities
• Government
• Others

Region

• North America
• Europe
• Asia-Pacific
• South America
• Middle East & Africa

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