Vendor Risk Management Market Size, Share & Trends Analysis Report By Component (Solutions, Services), By Deployment Type (On-premises, Cloud), By Organization Size (SMEs, Large Enterprises), By Vertical (BFSI, Telecom and IT, Consumer Goods and Retail, Healthcare and Life Sciences, Manufacturing, Energy and Utilities, Government, Others (Education and Media & Entertainment)) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2025-2033

Vendor Risk Management Market Size

The global vendor risk management market size was valued at USD 11.1 billion in 2024 and is projected to reach from USD 12.79 billion in 2025 to USD 39.7 billion by 2033, growing at a CAGR of 15.21% during the forecast period (2025-2033).

In modern business, the issue of third-party risk management is impossible to be overemphasized. Third-party risk management is essential to financial control management, contract management, operational risk management, audit management, and compliance management because it deals with managing hard situations and means finding solutions to complex problems.

Vendor risk management is the market and a process that involves controlling, recognizing, monitoring, and accessing a wide variety of potential risks. The hazards included operational risk, compliance risk, strategic risk, information security risk, and a great deal of other potential dangers. In other words, all these dangers are potentially brought about by the relationships that organizations have with outside parties.

Biggest impact of a third-party cybersecurity Incident

 Vendor Risk Management Market Trends

Cloud-based VRM solutions

Cloud-based VRM solutions are increasingly popular due to their scalability and flexibility, enabling organizations to expand their risk management processes without large infrastructure costs. Cloud accessibility also allows remote and hybrid teams to collaborate more effectively with external vendors, streamlining information sharing and automating workflows. Real-time updates in cloud VRM solutions reduce the time needed for risk assessments and compliance checks.

• For example, a Cloud Security Alliance study shows that 91% of organizations use cloud services to manage third-party risk, emphasizing the ongoing shift to cloud-based VRM for its efficiency and adaptability.

Vendor Risk Management Market Growth Factors

Need for the efficient management of complex vendor ecosystems

The need for effective management of complex vendor ecosystems is a key driver in the global VRM market. With businesses relying on multiple third-party vendors for critical products and services, VRM solutions streamline the process by assessing vendors’ performance on parameters like delivery accuracy, product quality, and timeliness.

By automating these evaluations, VRM solutions help organizations quickly identify and address risks, saving significant time and resources.

• For instance, global companies like Johnson & Johnson use VRM platforms to monitor their extensive network of suppliers, scoring each on compliance, performance, and potential risk.

This approach enables them to manage vendor risks proactively, maintain high-quality standards, and reduce supply chain disruptions, thereby enhancing overall operational efficiency.

Complexity of global supply chains

The complexity of the supply chain further elevates because companies are highly dependent upon a large network of vendors, suppliers, and partners spread over multiple geographies and industries. It becomes difficult to gain oversight in such ecosystems, especially when it is related to risks such as operational disruption, financial instability, and reputational threat.

Politically unstable regimes, regulation changes, and currency fluctuations can increase such risks, necessitating the imposition of more advanced VRM systems that are able to understand various and dynamic challenges.

• For instance, according to the World Economic Forum, supply chain disruptions caused by global crises in 2021 alone led to an estimated loss of $4 trillion in global trade.

This highlights the importance of efficient VRM in mitigating such risks.

Restraining Factors

Dependence on non-formal and manual processes by many organizations

A significant portion of the global market continues to rely on manual processes to assess and evaluate the risks associated with suppliers. Many organizations remain unaware of the critical need for VRM systems, leading to a reluctance to integrate these technologies into their operations. This lack of awareness prevents companies from effectively assessing supplier performance and managing associated risks. Instead, they predominantly rely on informal practices, which can result in incomplete risk evaluations and inadequate mitigation strategies.

This dependence on manual methods not only exposes organizations to potential vulnerabilities but also limits their ability to respond proactively to emerging risks in an increasingly complex vendor landscape. As the market evolves, it is essential for businesses to recognize the value of implementing formal VRM solutions to enhance their risk assessment capabilities and improve overall supplier management.

Market Opportunity

Technological advancements

Advancements in technology present significant opportunities for the global VRM market. As organizations increasingly rely on digital solutions to manage vendor relationships, technologies like artificial intelligence (AI), machine learning, and data analytics are transforming how businesses assess and mitigate risks. These innovations enable companies to process vast amounts of data quickly, identify patterns, and predict potential vendor-related issues before they arise.

• For example, companies like IBM leverage AI-driven VRM solutions to enhance their risk assessment capabilities. Their platform can analyze vendor performance data, compliance records, and market trends in real-time, providing organizations with actionable insights and enabling proactive decision-making.

This technological evolution not only improves the efficiency of risk management processes but also helps businesses ensure regulatory compliance and maintain high standards of quality across their vendor ecosystems. As technology continues to advance, VRM solutions will evolve, offering even greater opportunities for risk mitigation and operational excellence.

Regional Insights

North America: Dominant region with a significant market share

The most significant shareholder in the global VRM market belongs to North America, mainly due to strict compliance requirements, the presence of large enterprise houses, and a strong IT infrastructure. The region, especially the U.S., has stiff regulatory compliance standards in the form of the Sarbanes-Oxley Act (SOX), GDPR, and HIPAA, forcing organizations to invest rigorously in VRM solutions.

With critical sectors such as BFSI, IT, and healthcare concentrated in North America, the requirement for third-party risk management through wholesome VRM systems increases.

• For instance, According to the U.S. Federal Trade Commission (FTC), compliance violations and cybersecurity risks from third-party vendors affected over 60% of businesses in the region, reinforcing the demand for VRM solutions in North America.

Europe: Significant rapidly growing region

Europe is the second-dominant region in the global VRM market, and it is largely driven by the implementation of stringent data protection regulations like the General Data Protection Regulation (GDPR). European organizations, especially in sectors such as BFSI, healthcare, and IT, are required to maintain high levels of compliance regarding data security and privacy when managing third-party vendors.

The emphasis on data privacy, combined with an increasing focus on ESG (Environmental, Social, and Governance) criteria, has spurred investments in VRM solutions across the region.

• For instance, As of 2024, the cumulative total of GDPR fines is now getting close to €5 billion, underscoring the ongoing commitment to enforcing data protection regulations and the increasing financial consequences of non-compliance.

Countries Insights

• United States: According to the Federal Trade Commission (FTC), over 70% of data breaches in 2022 originated from third-party vendors. This statistic underscores the critical need for effective vendor risk management solutions to protect confidential information and maintain consumer trust.

• United Kingdom: In 2021, the Information Commissioner's Office (ICO) imposed fines totaling £54 million for data protection violations, many of which were linked to breaches involving third-party vendors. This serves as a compelling justification for organizations to adopt practical and effective VRM solutions to mitigate similar risks in the future.

• Germany: By 2022, at least 80% of companies reported experiencing incidents involving third parties, including vendors. This alarming trend emphasizes the necessity for stronger frameworks in VRM to ensure data security and compliance with regulations.
• Canada: In 2021, data breaches affected more than 3 million Canadians, with a significant portion stemming from third-party service providers. This situation highlights the urgent need for improved VRM strategies to safeguard personal and sensitive information.
• Australia: The Office of the Australian Information Commissioner (OAIC) released a report indicating that in 2021, third-party vendors were responsible for over 30% of data breaches. This fact underscores the necessity for businesses to enhance their vendor risk management practices to protect their data and uphold regulatory compliance.
• France: In response to the increasing risks posed by third-party vendors, the French Data Protection Authority (CNIL) has issued guidelines urging organizations to conduct thorough assessments of their vendors' security practices. This proactive approach reflects a growing recognition of the need for robust VRM frameworks.
• India: As India continues to embrace digital transformation, the reliance on third-party vendors has also increased. The government has recognized the importance of VRM, leading to initiatives aimed at improving cybersecurity practices across various sectors to safeguard consumer data.

Segmentation Analysis

By Components

Services are increasingly outpacing solutions in the VRM market. This trend arises from the essential role of consulting, implementation, training, and support services in helping organizations successfully integrate VRM into their existing systems. Many businesses lack the internal expertise required to navigate complex risk environments, prompting them to seek external services for compliance, risk assessment, and ongoing vendor monitoring.

These services enable organizations to customize VRM solutions to meet specific business needs while ensuring adherence to relevant regulatory frameworks and effectively mitigating associated risks.

• For example, a 2022 report by the International Data Corporation (IDC) revealed that over 60% of organizations investing in VRM prioritize professional services to manage third-party risks effectively.

By Deployment Type

Compared to on-premises deployments, the application of VRM platforms is predominantly dominated by cloud-based solutions. Scalability and flexibility, which are in tandem with lower costs as far as front-end expenses are concerned, make it an efficient way for businesses to adjust to ever-changing risk landscapes.

The solution from the cloud comes with flexibility: faster implementation, remote access, and easier integration into existing IT systems. This is where businesses with distributed teams or operating globally find themselves gravitating towards a cloud-based VRM platform.

• For instance, According to a study by the Cloud Security Alliance, 91% of organizations are now using cloud-based services to manage third-party risks, underscoring the dominance of cloud solutions in this segment.

By Organization Size

Large enterprises have much more mature and wide-ranging vendor ecosystems that pose a greater threat from the third party. To effectively govern third-party risk, large companies require robust VRM solutions with the capacity and complexity to support their global operations. Large enterprises are also under more regulatory scrutiny and, thus, are likely to spend on a fully integrated risk management framework to avoid non-compliance and its resultant reputational damage.

• For instance, According to the International Organization for Standardization (ISO), large organizations account for over 70% of the demand for advanced risk management systems, including VRM, due to the greater scope and complexity of their third-party relationships.

By Vertical

The BFSI industry is heavily regulated and involves huge chunks of sensitive customer information; hence, it is more susceptible to risks by third-party vendors. Such financial institutions have to adhere to highly stringent regulations on data privacy, cybersecurity, and even operational risk management under GDPR, CCPA, and various others.

Consequently, robust investment is made by BFSI organizations in strong VRM solutions to ascertain compliance, ensure the safety of data, and minimize vendors' relationship risks.

• For instance, According to the International Monetary Fund (IMF), the financial services industry faces one of the highest levels of regulatory oversight, with more than 50% of data breaches in the financial sector involving third-party vendors, further highlighting the importance of VRM in this vertical.

Company Market Share

Key market players are investing in advanced VRM technologies and pursuing strategies such as collaborations, acquisitions, and partnerships to enhance their products and expand their market presence.

DataRobot: An Emerging Player in the VRM Market

DataRobot is a new entrant to the MLaaS market. It focuses its areas of expertise on delivering automated solutions in machine learning, helping organizations build, deploy, and manage predictive models more rapidly and effectively. The platform supports both data scientists and business analysts by providing tools and capabilities that streamline machine learning, enable faster insights, and significantly accelerate decision-making.

Recent Developments by DataRobot 

• In July 2024, DataRobot released new predictive AI functionality aimed at enhancing the scalability, integrity, and performance of AI models from development through deployment, including both DataRobot-built and custom models.

Recent Developments

• September 2024 - Vanta Inc. announced new product features and enhancements aimed at automating and streamlining governance, risk, and compliance processes for businesses. These innovations focus on simplifying compliance workflows, enabling companies to manage vendor risks more effectively while ensuring adherence to regulatory standards.
• October 2024 - ProviderTrust and Ntracts formed a partnership to proactively address vendor risk. This collaboration combines ProviderTrust's expertise in healthcare compliance and vendor monitoring with Ntracts' capabilities in contract management and workflow automation.

Analyst Opinion

As per our analyst, the vendor risk management market is poised for substantial growth, largely fueled by the increasing need for efficient management of complex vendor ecosystems. Organizations are recognizing the importance of implementing robust VRM strategies to navigate the challenges posed by multiple third-party relationships.

However, the market faces some restraining factors, particularly the reliance on informal and manual processes by many organizations. This dependency can hinder the effectiveness of risk assessments and compliance checks, ultimately affecting overall vendor performance and risk mitigation.

To capitalize on the market's growth potential, organizations must transition to more automated and integrated VRM solutions that streamline processes and enhance collaboration across vendor networks.