Third-Party Risk Management Market Size - By Component (Solutions, Services), By Organization (SME, Large enterprises), By End-user (IT & Telecom, BFSI, Healthcare, Retail, Manufacturing, Energy & Utility), By Deployment Model & Forecast, 2024 - 2032

Third-Party Risk Management Market Size

Third-Party Risk Management Market size was valued at USD 6.1 billion in 2023 and is estimated to register a CAGR of over 15% between 2024 and 2032. The market involves managing risks linked to outsourcing relationships. It addresses concerns like data security, compliance, and operational continuity. TPRM leverages AI for advanced risk assessment and monitoring, ensuring compliance, data security, and operational continuity across supply chains. AI analyzes vast data sets to detect anomalies and predict potential risks, enhancing proactive mitigation strategies. This approach safeguards businesses from financial losses, regulatory penalties, and reputational damage, crucial in today's interconnected business landscape.
 

For instance, in March 2024, Sapphire, a cybersecurity Managed Service Provider (MSP) based in the UK, introduced a new third-party risk management (TPRM) service utilizing technology from Swiss startup Agnostic Intelligence. This AI-driven platform enables Sapphire to enhance risk scoring based on suppliers' cybersecurity maturity and deliver clients a comprehensive view of risks from all angles.
 

Increasing cybersecurity threats drive demand for enhanced third-party risk management market. With rising incidents of data breaches and cyberattacks targeting supply chains, businesses prioritize robust risk assessment and mitigation strategies. This growth propels the adoption of advanced technologies like AI and machine learning to detect vulnerabilities and monitor third-party activities in real-time. Proactive measures safeguard sensitive data, maintain regulatory compliance, and fortify organizational resilience against evolving cyber threats.
 

High implementation costs can be a significant barrier, deterring organizations from adopting advanced third-party risk management solutions. The initial expense of integrating sophisticated technologies like AI and cybersecurity frameworks, coupled with ongoing maintenance and training costs, can strain budgets. Smaller enterprises, in particular, may struggle to allocate sufficient resources, risking inadequate risk assessment and mitigation. This financial burden might lead to delayed adoption of critical security measures, leaving businesses vulnerable to potential risks. Conclusively, while robust risk management is essential, the high upfront costs need careful consideration and strategic investment planning.
 

Third-Party Risk Management Market Trends

By improving predictive capacities and risk mitigation techniques, cutting-edge technologies such as artificial intelligence (AI), machine learning (ML), and the Internet of Things (IoT) are changing the dynamics of third-party risk management industry. Proactive management is being made possible by AI and ML, which analyze enormous volumes of data from many sources and find patterns and abnormalities that can point to possible threats.
 

Companies are collaborating to advance cloud security for third-party risk management by developing integrated solutions. These partnerships focus on enhancing data encryption, access controls, and real-time monitoring capabilities. By pooling expertise and resources, they aim to strengthen defenses against cyber threats and ensure secure data management across distributed networks.
 

For instance, in May 2024, Queen's CSIT Centre and Rapid7 forged a collaboration in AI security research to foster advancements in cloud security. Leveraging artificial intelligence (AI) and advanced machine learning (ML) methods, this partnership aims to identify risks and detect active threats within cloud environments. Initially, the focus will be on pinpointing potential exposure of sensitive information.
 

Third-Party Risk Management Market Analysis

Based on component, the market is divided into solution and services. In 2023, the solution segment accounted for a market share of around 65%. The growth towards comprehensive and automated solutions is accelerating in response to complex risk landscapes. Businesses are increasingly investing in advanced software integrating AI, ML, and IoT to streamline risk assessment, mitigation, and detection processes. These solutions offer real-time analytics, enhanced visibility, and predictive capabilities, crucial for managing the growing complexity of third-party interactions effectively.
 

For instance, in June 2024, FIS introduced its Climate Risk Financial Modeler, a Software-as-a-Service (SaaS) solution tailored to aid clients in assessing, mitigating, and disclosing risks associated with climate change. This offering is geared towards optimizing risk management practices across various industries by utilizing FIS' expertise in risk modeling and insurance analytics. By amalgamating client data with third-party climate data sourced from PwC US, including details concerning a firm's physical assets such as buildings and contents, alongside global climate data, the modeler enhances businesses' ability to manage their exposure to the physical risks of climate change.
 

Based on end user, the third-party risk management market is categorized into IT & telecom, BFSI, healthcare, retail, manufacturing, energy & utility, and othersThe BFSI segment accounted for a market share of around 26% in 2023. The BFSI sector makes significant investments in risk management solutions to meet tight regulatory requirements, minimize financial risks, and prevent fraud. Advanced analytics and AI-powered solutions are extensively used to assure compliance, strengthen cybersecurity, and efficiently manage credit and market risks.
 

In May 2024, Ethixbase360, a leading provider of third-party risk management solutions, announced an extended partnership with Moody's aimed at bolstering AI and advanced data integration within its platform. This enhancement is particularly beneficial for the fintech sector, enhancing capabilities in third-party risk management by leveraging cutting-edge technology to ensure robust and secure operations.
 

North America dominated the global third-party risk management market with a major share of over 36% in 2023. The market is expanding significantly in the region, owing to rapid digitalization, integration of cutting-edge technology, and rising frequency of sophisticated data breaches/cyberattacks. Most of the businesses in countries such as U.S. and Canada are quickly implementing digital transformation programs, which frequently entail collaborating with outside partners to improve operational effectiveness and creativity. Robust risk management solutions are necessary as the vulnerabilities linked to third-party connections grow with these digital ecosystems, thus driving the adoption of risk management solutions.
 

The market has grown significantly in Europe and the Asia-Pacific region as a result of growing cyber risks, regulatory challenges, and the expansion of digital transformation projects. Stricter data protection laws such as the General Data Protection Regulation (GDPR) in Europe have mandated businesses in a variety of industries to improve their third-party risk management procedures. Risk mitigation is a major concern for industries such as banking, healthcare, and manufacturing that outsource vital processes to outside contractors, thus driving the market growth.      
             

Overall, the third-party risk management market is growing in Europe and Asia-Pacific as a result of both areas embracing cutting-edge technologies such as artificial intelligence (AI), machine learning (ML), and predictive analytics to strengthen their resilience against emerging threats.
       

Third-Party Risk Management Market Share

PwC, KPMG, and Service Now hold a significant market share of 16% in third party risk management industry. With its all-inclusive risk management solutions, PwC shines, skillfully combining AI and machine learning to anticipate and successfully counter possible dangers. They provide solutions for ongoing compliance and monitoring in a variety of industries, such as healthcare and finance.
 

KPMG is distinguished by its scalable governance, risk, and compliance platform that uses cutting-edge analytics to deliver real-time insights on third-party risks. As essential participants in preserving corporate integrity and resilience in a dynamic global environment, their solutions are designed to satisfy strict regulatory standards and manage increasing cyber threats.
 

Third-Party Risk Management Market Share

The major players operating in the third-party risk management industry are:

• PwC
• KPMG
• ServiceNow, Inc.
• Deloitte
• Genpact
• BitSight Technologies, Inc.
• NAVEX Global, Inc.
   

Third-Party Risk Management Industry News

• In November 2023, Microsoft introduced Microsoft Security Copilot, an innovative generative AI solution. This technology merges Microsoft's extensive data advantage, boasting 65 trillion daily signals, with end-to-end security architecture founded on Zero Trust principles. The primary goal of Security Copilot is to level the playing field in the digital threat landscape, empowering security teams with personalized insights to defend against cyber threats at machine speed.
   
• In June 2022, IBM completed the acquisition of Randori, an offensive security startup headquartered in Boston. Randori specializes in attack surface management (ASM) and continuous automated red teaming (CART). This acquisition is intended to enhance IBM's cybersecurity portfolio by incorporating Randori's software into IBM Security QRadar's extended detection and response (XDR) capabilities.
   

The third-party risk management market research report includes in-depth coverage of the industry with estimates & forecast in terms of revenue ($Bn) from 2021 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
• Services
  • Consulting
  • Support
  • Integration

Market, By Organization

• SME
• Large enterprises

Market, By Deployment Model

• Cloud 
• On-premises  

Market, By End user

• IT & telecom  
• BFSI    
• Healthcare     
• Retail 
• Manufacturing          
• Energy & Utility         
• Others

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Italy
  • Spain
  • Nordics
  • 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
  • Saudi Arabia
  • South Africa
  • Rest of MEA