Vendor Risk Management Market Size

Vendor Risk Management Market Size Snapshot

Note – Market size depicts the revenue generated over the financial year

The Vendor Risk Management market is valued at USD 5.8 billion in 2023 and is projected to reach USD 15.6 billion by 2032, growing at a CAGR of 11.65% from 2024 to 2032. This significant growth is due to the increasing importance of managing vendor-related risks in an increasingly interconnected business environment. The use of third-party vendors has become a crucial part of supply chains, and the need for comprehensive risk management solutions has increased. Also driving this growth are the growing number of cyber attacks, regulatory requirements and a greater focus on data security. Artificial intelligence and machine learning are also enhancing the capabilities of vendor risk management solutions, enabling organizations to manage risks more effectively. The market leaders, such as RSA Security, MetricStream and RiskWatch, are strengthening their market positions through strategic initiatives such as product launches and acquisitions. Moreover, recent collaborations between vendors to integrate advanced analytics into vendor risk management systems are indicative of the industry’s commitment to deploying advanced technology to improve risk management outcomes.

Regional Market Size

Regional Deep Dive

The Vendor Risk Management Market is experiencing significant growth in various regions, owing to the rising regulatory pressure, the emergence of digital transformation, and the growing awareness of cyber threats. In North America, the market is characterized by a mature market, with a strong emphasis on risk mitigation and compliance. Europe is experiencing an increase in the demand for vendor risk management solutions, owing to the implementation of the GDPR, while Asia-Pacific is experiencing a strong uptake of these solutions to improve the resilience of its supply chain. The Middle East and Africa (MEA) are beginning to see the importance of vendor risk management, especially in the financial and healthcare industries, while Latin America is starting to adopt these solutions as part of its digital transformation strategy.

North America

• In this regard, the recent implementation of the Californian data protection law has made companies review their vendor risk management frameworks and invest more in technology solutions.
• In the vendor risk management field, the big players such as IBM and RSA are launching new tools based on advanced analytics and artificial intelligence.
• The growth of the remote workforce has also increased the importance of third-party risks. Organizations have to rely on their suppliers’ security practices to protect their own data.

Europe

• The imposition of the GDPR has a significant impact on vendor risk management. In order to avoid high fines, companies have had to adopt more stringent procedures for assessing the vendor.
• The solution of the problem is the most complete vendor risk management solution. Trustwave and RiskLens are at the forefront of the industry in offering such a solution.
• The Digital Services Act will further shape the market by introducing stricter requirements for the way companies manage third-party risks, especially in the technology sector.

Asia-Pacific

• The digitalization of the economy of countries such as India and China is driving the need for vendor risk management solutions, as companies look to secure their supply chains against cyber-threats.
• Local players such as Zscaler and CyberArk are now leading the way with solutions that meet the unique needs of the region’s industries.
• The recent government initiatives to enhance the security of the Internet have led to the adoption of the practice of vendor risk management, especially in the financial and health sectors.

MEA

• It has been observed that in the Middle East the financial institutions are increasingly adopting vendor risk management solutions in order to comply with the requirements of the Central Bank of the United Arab Emirates, which emphasizes the need for risk management in the financial sector.
• Companies like Deloitte and PwC are actively engaged in third-party risk assessment and offer consulting services to help businesses manage third-party risks.
• Among the reasons for this are the following: cultural factors, such as the importance attached in business to relations and to trust, are influencing the way in which the risk of the suppliers is being managed, and this leads to more personal approaches to the assessment of the suppliers.

Latin America

• Latin American organizations are investing in vendor risk management solutions, especially in Brazil and Mexico, where the digital transformation is accelerating.
• The risk management solutions of Totvs and Linx are developed for the region, addressing the special challenges of this part of the world.
• Regulatory changes, such as the introduction of the LGPD in Brazil, are causing companies to enhance their supplier risk management practices to ensure compliance with the law.

Did You Know?

“Around 60 per cent of organizations have experienced a data breach due to third-party suppliers, highlighting the importance of robust supplier risk management.” — Ponemon Institute, 2023

Segmental Market Size

The Vendor Risk Management (VRM) segment plays a crucial role in enhancing the resilience of an organization by identifying and mitigating risks associated with third-party vendors. VRM is a growing market, driven by increasing regulatory scrutiny and the growing complexity of supply chains. VRM is becoming a priority for organizations to protect sensitive data and to ensure compliance with the likes of the General Data Protection Regulation (GDPR) and the Californian Consumer Privacy Act (CCPA).

The demand is driven by a growing focus on cyber risks and the need for a risk-assessment framework. The adoption is varied: many organizations are in the pilot phase, while others have reached full scale. There are notable leaders in this field, such as IBM and Microsoft, which have integrated VRM solutions into their own operational frameworks. VRM is used primarily in the financial services, health and manufacturing industries to monitor and evaluate the performance and compliance of suppliers. The current trend towards digital transformation and remote working is increasing the need for VRM, which is now able to use machine learning and artificial intelligence to enhance its risk-assessment methods.

Future Outlook

The VRM market will grow from $5.7 billion in 2023 to $15.6 billion in 2032, growing at a strong CAGR of 11.6 percent. This growth is largely driven by the increasing complexity of supply chains, the increased focus on compliance and risk mitigation in a rapidly changing regulatory environment, and the increasing focus on risk mitigation and compliance in a fast-changing business environment. VRM solutions that are able to effectively manage vendor-related risks will become more popular, which will lead to increased market penetration and usage across industries, especially in the finance, health care, and technology industries.

The VRM will be revolutionized by the advent of such key technological developments as artificial intelligence (AI) and machine learning (ML). With growing concern about data privacy and cybersecurity, the VRM will also be pushed to greater heights. And then there’s the use of blockchain technology to enhance the transparency and trustworthiness of vendor relationships. As the strategic importance of VRM becomes ever more widely recognized, the VRM market will continue to evolve, bringing innovation and new opportunities for vendors and service providers alike.