According to a new report by UnivDatos, the Third-Party Risk Management Market is expected to reach around USD 21 Billion in 2032 by growing at a CAGR of ~15%. Organizations have leveraged Outsourcing to gain competition in diverse areas of operations since the business world has transformed to be strategically linked in this current world. These partnerships open numerous advantages and at the same time, impose noteworthy threats that may compromise operational accountability, data protection, and legal conformance.
Global Demand for Third-Party Risk Management
The global demand for TPRM solutions has been influenced by several factors, namely, the burgeoning regulatory requirements, complex supply chain systems, and the emerging threat of cybercrime. Global regulatory bodies are putting in place more demanding conditions on corporations to contain third-party risk. Legal frameworks such as GDPR, CCPA, and numerous financial industry standards prove that organizations require robust TPRM strategies. Failure to abide by these regulations leads to fines and a negative reputation, hence the need for organizations to spend significant amounts on TPRM solutions.
Further, the globalization aspect creates a complex system of supply chain links that puts a lot of emphasis on exactly identifying whether the third party is trustworthy. The Pandemic of COVID-19 revealed new weaknesses in resilient supply chains resulting in disruptions that pose threats to business sustainability. Thus, third-party risk evaluation has now become an important goal and priority to maintain organizational security and operational continuity.
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Applications of Third-Party Risk Management
1. Financial Services
The financial services industry is particularly highly regulated, and rules and standards concerning third-party relationships are elaborate. The requirements for third-party risk management that institutions such as banks, insurance companies, and other financial organizations have to meet currently contain rather strict guidelines for the identification and assessment of risks and subsequent, constant monitoring of the potential threats coming from third parties. TPRM solutions assist such organizations in assessing the financial solvency, security, and compliance of their third-party vendors satisfying specific legal standards, and managing inherited risks.
2. Healthcare
HIPAA is the act that addresses the security discovery uses of technology in healthcare and the protection of patient data. Hospitals and other health care-related institutions outsource several activities from data management to medical equipment production. TPRM solutions provide evaluations on the risks specific to these vendors so that healthcare entities can safeguard the confidentiality, integrity, and availability of patients’ information.
3. Manufacturing
Third-party suppliers are used significantly in the manufacturing industry for the supply of raw materials, acquired components, and transport services. Sustaining damage in the chain network normally exposes the manufacturers to increased production risks and financial losses. TPRM solutions help manufacturers determine the possible threats in the context of supply chain management, assess the performance of the supplier, and plan the contingencies that would help them carry on their business uninterrupted.
4. Retail
Retailers often outsource some operations and services from other companies, such as the handling of payments, shipping services, and promotional services. Due to the large number of business transactions and customer information processed by the retailers, these industries are prime targets for hackers. TPRM solutions assist the retailers in considering and evaluating the security standards of the vendors; ensuring implementation of data protection laws concerning third-party companies; and addressing any risks tied to the third parties’ partnerships.
5. Technology
Software and IT companies rely on outsourcing partners for product development, cloud services, and technical support. These collaborations bring considerations of piracy of intellectual property, data leakage/loss, and service unavailability. TPRM solutions help technology firms assess the security and compliance measures implemented by the vendors concerning the clients’ information and uninterrupted service delivery.
Recent Developments/Awareness Programs:- Several key players and governments are rapidly adopting strategic alliances, such as partnerships, or awareness programs for the treatment:-
· 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.
· In April 2021, MetricStream announced the launch of Arno software, including numerous features and innovations added to its platform and products. It also successfully added new capabilities to Internal Audit Management, Policy and Compliance Management, and Third-Party Risk Management products. With this, the company was able to set a new standard for governance, risk and compliance, and integrated risk management, further enabling organizations to leverage risk as a strategic advantage.
· August 2022: IBM released Trust Your Supplier, a brand-new blockchain-based supply chain risk management solution. The blockchain network enables businesses to validate and onboard their vendors more efficiently while ensuring a safe audit trail of buyer-supplier interactions throughout the supply chain.
Conclusion
The third-party risk management market at the global level is expected to have explosive growth as more and more organizations across the sectors realize the relevance of managing risks connected with third parties. Some of the forces that are positively influencing the uptake of TPRM solutions include compliance requirements, demanding supply networks, and security threats. With the help of modern TPRM approaches and tools, companies can protect their activities, prevent critical information leakage, and meet all the requirements of the legislation. According to the UnivDatos analysis, The expansion of the third-party risk management market into emerging markets presents significant growth opportunities. Furthermore, increasing regulatory requirements and data governance standards are pushing companies to adopt TPRM solutions to ensure compliance and data security. The market was valued at USD ~6 billion in 2023, growing at a CAGR of ~15% during the forecast period from 2024 - 2032 to reach USD billion by 2032.
Key Offerings of the Report
Market Size, Trends, & Forecast by Revenue | 2024−2032F.
Market Dynamics – Leading Trends, Growth Drivers, Restraints, and Investment Opportunities
Market Segmentation – A detailed analysis by Component, Organization, Deployment Model, and End-User
Competitive Landscape – Top Key Vendors and Other Prominent Vendors
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