Gartner Says Perfect Storm of Third-Party Risks are Driving Growth and Maturity in Third-Party Risk Management Technology Solutions

The increase in trade volatility, persistent cyberattacks, new regulatory requirements, and supply chain disruptions, are rapidly advancing the adoption of third-party risk management (TPRM) technology solutions, according to Gartner, Inc.  

“Regulators and stakeholders are certainly paying attention; they are interested in how organizations are effectively managing their third-party risk activities,” said Antonia Donaldson, Director Analyst in Gartner’s Assurance Practice. “Many organizations, particularly multinationals, are experiencing an exponential increase in the number of third parties they rely on in order to conduct their business around the world.”

This intersection creates a perfect storm and heightens third-party risk. Organizations seek to surface, escalate, and mitigate third-party risk by leveraging the latest TPRM technology solutions.

“Deploying TPRM technology is not a magic solution, but in an increasingly complex business landscape TPRM platforms allow organizations to better mitigate the inherent risks while continuously monitoring their third and fourth parties,” said Donaldson.

TPRM Market Maturity and Direction
“With a large number of vendors in the TPRM technology market and the lack of a one-size-fits-all solution, the market is in the early stages of maturity with future consolidation quite possible,” said Donaldson. “Many large enterprises use two or more technology solutions with distinct TPRM capabilities, which multiple business functions then leverage.”

Organizations are finding that a siloed approach to third-party management across disparate functions doesn’t tend to work well. Many multinationals are formalizing third-party oversight and governance, then leverage TPRM technology solutions to surface risks more rapidly.

To address this need, many TPRM technology providers continue to invest in integrated cross-functional risk-management capabilities, allowing clients and customers to manage their third-party risk domains across multiple business functions and numerous stakeholders.

“Many vendors are incorporating machine learning and AI to support automated assessment and analysis; this allows companies to better evaluate and respond to third-party risks,” said Donaldson. “With appropriate disclosures and human review, embedded AI will be a competitive differentiator – managing and making sense out of large volumes of TPRM data is resource intensive.”

Recommendations for Buyers
A robust TPRM platform should enable seamless flow of risk information across all relevant functions and users, thereby enhancing the organization's visibility into potential third-party risks. When selecting a TPRM solution, adaptability and scalability are key. Organizations should ensure that the chosen platform can meet both immediate and future program needs. It is crucial to establish a "must-have" list of capabilities before engaging with vendors to streamline the selection process.

“When evaluating licensing options, companies should look beyond cost considerations. It is important to assess both short-term and long-term implementation and integration requirements, including APIs, to ensure the chosen TPRM solution aligns with the organization's risk priorities and strategic objectives,” said Donaldson. “By taking these essential steps, organizations can effectively manage third-party risks.”

Additional information is available to clients in the Gartner report Market Guide for Third-Party Risk Management Technology Solutions.  Nonclients can download the eBook Stay Ahead of Growing Third Party Risk.