Third-Party Risk Management Market: Current Analysis and Forecast (2024-2032)

The third-party risk management market refers to an industry that is focused on assisting various organizations to properly address the risks posed by third-party vendors and providers. This market consists of different tools and services that help the enterprise assess vulnerabilities, comply with the identified risks and legislative requirements, safeguard vital information and business processes, and maintain business as usual. As the focus on managing third-party partners in business continues to increase across industries, so does the need for effective third-party risk management solutions, which will help protect companies' businesses and meet legal standards.

The third-party risk management market is set to exhibit a growth rate of about 15%. This is mainly due to strategic alliances with cloud service providers and other tech firms that can enhance product offerings and market reach. For instance, in October 2023, Optiv Security Inc. achieved recognition as a Leader in the IDC MarketScape: Worldwide Cybersecurity Risk Management (CRM) Services 2023 Vendor Assessment. The assessment highlighted Optiv's comprehensive risk management services and proactive guidance in navigating the escalating cyber threat landscape. This acknowledgment in the respected IDC MarketScape contributed to the company's success by showcasing its expertise and effectiveness in helping clients achieve their business and risk management objectives.

Based on the component, the market is bifurcated into solutions and services. The solution category is expected to have the largest market share of the third-party risk management market by offering extensive solutions and instruments that help organizations ensure that third-party vendors do not pose any threats to the organization. These solutions have features like risk evaluation, ongoing vigil mechanism, and good reporting tools that help better manage the risks and strengthen security and conformance measures. With the help of analytics and machine learning, these solutions may identify the factors that can become a threat, which can minimize the risks and maintain compliance with the existing regulations. The market has growth potential because more businesses use third-party vendors, which requires reliable risk management solutions.

Based on the organization, the market is bifurcated into SMEs and large enterprises. Among these, the SME category is expected to have the largest market share. Due to the subsequent spending on third-party resources as part of business strategies geared towards staying agile and competitive, Small and Medium-sized Enterprises (SMEs) are slowly developing an appetite for third-party risk management. Current literature has established that SMEs are vulnerable to risks because they tend to have a small capital base and their managers lack sufficient experience in risk management. Using third-party risk management solutions assists SMEs in managing their risk evaluation practices, which assists in conforming to the industry guidelines and requirements. This increasing awareness and adoption in SMEs increase the market demand for third-party risk management solutions tremendously.

Based on the deployment model, the market is bifurcated into on-premises and cloud-based. Among these, the cloud-based category is expected to have the largest market share. The third-party risk management market is driven mostly by the trend to put more emphasis on cloud computing solutions. Since the origination of data and execution of various operations in the cloud, companies are particularly leaning on third-party CSPs. It offers certain advantages associated with efficiency and application effectiveness. However, certain drawbacks are associated with data security, compliance, and disruptions in operations. Firms can avail themselves of third-party risk management solutions wherein these risks of cloud structures can be managed efficiently and securely. The use of cloud services increases the pace of the emergence of efficient third-party risk management systems.

Based on the end-user, the market is segmented into IT & Telecom, BFSI, Healthcare, Retail, Manufacturing, Energy & Utility. Among these, the BFSI category is expected to have the largest market share. BFSI is one of the most strictly controlled and if exposed to risk, can turn into one of the most vulnerable sectors. The BFSI industry relies heavily on third-party vendors for aspects of services and hence it is imperative to protect customer data and meet regulatory requirements. Overcoming third-party risk management activities enables the BFSI organization to recognize and address risks affiliated with their vendors. Since risk management is of paramount importance in this industry of financial services, the third-party risk management industry experiences massive growth as more and more BFSI organizations look for solutions for thorough risk evaluation and containment.

For a better understanding of the market adoption of third-party risk management, the market is analyzed based on its worldwide presence in countries such as North America (U.S., Canada, and the Rest of North America), Europe (Germany, U.K., France, Spain, Italy, Rest of Europe), Asia-Pacific (China, Japan, India, Rest of Asia-Pacific), Rest of World. The North American third-party risk management market is a segmented market that benefits from the continuous implementation of outsourcing services and third-party services due to regulatory bodies' stringent rules and regulations in the region. Some of the industries in North America that are under pressure to respond to third-party risk management are those within the financial sector, healthcare, and manufacturing industries as they are under pressure to meet GDPR, CCPA, and other international regulations. The market is highly dynamic when it comes to the adoption of solutions that can incorporate the use of artificial intelligence and cloud-based services in the handling of risk management functions. This increasing focus on effective and efficient TPRM practices makes North America a key player in the global third-party risk management market.

Some of the major players operating in the market include PwC; KPMG International; ServiceNow; Deloitte; Genpact; BitSight Technologies, Inc.; NAVEX Global, Inc.; EY; IBM; and RSA Security LLC