Third Party Risk Management Market Size

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.

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.