Third-Party Risk Management Market is expected to grow at a CAGR of 17.8% during the forecast period 2024-2031

The Vendor Risk Management (VRM) market is experiencing robust growth, projected to reach $11.98 billion in 2025 and maintain a Compound Annual Growth Rate (CAGR) exceeding 12.50% from 2025 to 2033. This expansion is fueled by several key factors. Increasing regulatory scrutiny across various industries, coupled with the rising frequency and severity of cyberattacks and data breaches, are driving organizations to prioritize robust VRM strategies. The growing adoption of cloud-based solutions and the expansion of global supply chains are further contributing to market growth. Furthermore, the increasing complexity of IT infrastructures and the reliance on third-party vendors necessitate comprehensive VRM programs to mitigate potential risks. The market is segmented by type (solutions and services), deployment (on-premises and cloud), organization size (SMEs and large enterprises), and industry vertical (BFSI, Telecom & IT, Manufacturing, Government, Healthcare, and others). The solutions segment, encompassing Vendor Information Management, Quality Assurance Management, Financial Control, Compliance Management, Audit Management, and Contract Management, dominates the market due to the crucial role these solutions play in comprehensive risk mitigation. The cloud deployment model is gaining traction due to its scalability, cost-effectiveness, and accessibility. Large enterprises are the primary adopters of VRM solutions, driven by their complex supply chains and greater regulatory pressures. North America currently holds a significant market share, but the Asia-Pacific region is projected to witness substantial growth in the coming years, fueled by increasing digitalization and adoption of advanced technologies. Leading players like RSA Security LLC, Genpact Limited, LockPath, MetricStream, IBM Corporation, and others are shaping the market landscape through strategic partnerships, acquisitions, and product innovations. The competitive landscape is characterized by a mix of established players and emerging vendors, leading to innovation and market dynamism. However, factors such as high implementation costs, integration challenges, and the need for skilled professionals can restrain market growth to some degree. Despite these challenges, the ongoing digital transformation and increasing reliance on third-party vendors will continue to drive the demand for effective VRM solutions, ensuring sustained market growth throughout the forecast period. Recent developments include: September 2023 - Certa, a third-party management platform, has raised USD 35 million to invest in artificial intelligence that takes text-based policies around everything from ESG and legal to compliance and procurement and converts them into controlled workflows that integrate with third-party tools. Using artificial intelligence will allow customers to reduce the size of their vendor management team and onboard third-party providers more quickly., May 2023 - Vanta, a SaaS-based security and compliance solution provider, launched a Vendor Risk Management (VRM) offering focused on helping customers streamline third-party security with automated workflows for vendor security reviews and compliance. It is designed to combine the entire vendor management process within a single, automated workflow with necessary integrations with third-party applications, identity providers, and database systems.. Key drivers for this market are: Need for the Efficient Management of Complex Vendor Ecosystems, View the Risk Levels Associated With Various Tasks. Potential restraints include: Need for the Efficient Management of Complex Vendor Ecosystems, View the Risk Levels Associated With Various Tasks. Notable trends are: BFSI is Expected to Witness Significant Growth.

The Vendor Risk Management (VRM) market has emerged as a critical component in fostering secure and efficient business operations across various industries. As organizations increasingly rely on third-party vendors for services and solutions, the need to mitigate risks associated with these partnerships has become p

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Vendor Management Software Market Size 2025-2029

The vendor management software market size is forecast to increase by USD 14.28 billion, at a CAGR of 18.6% between 2024 and 2029.

The market is experiencing significant growth, driven by the increasing adoption of cloud-based solutions. This shift is in response to the numerous benefits offered by cloud-based systems, including flexibility, scalability, and cost savings. Another key trend is the rising demand for integrated vendor management solutions, which enable organizations to manage various aspects of the company relationship in a unified platform. This market also exhibits robust growth due to increasing focus on cost efficiency, performance management, and risk mitigation in global supply chains. However, the market also faces challenges. One significant obstacle is the high implementation and maintenance costs associated with on-premises vendor management software. This can deter smaller organizations or those with limited budgets from investing in these solutions.
Legacy systems and data security, including privacy issues, remain challenges for market participants. Another challenge is the complexity of vendor management processes, which can be time-consuming and resource-intensive. To address these challenges, leading players in the market, such as Coupa Software, SAP Ariba, and Icertis, are focusing on developing user-friendly, cost-effective solutions that streamline vendor management processes and offer seamless integration with other business systems. By addressing these challenges and leveraging the latest technologies companies can capitalize on the growing demand for vendor management software and help transportation companies manage their supplier relationships, monitor performance, and optimize logistics operations. and improve operational efficiency.

What will be the Size of the Vendor Management Software Market during the forecast period?

Explore in-depth regional segment analysis with market size data - historical 2019-2023 and forecasts 2025-2029 - in the full report.
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The market continues to evolve, with dynamic market activities shaping the industry's landscape. RFQ management and contract negotiation processes are streamlined, enabling businesses to make informed decisions and establish effective partnerships. Business intelligence tools provide valuable insights, enhancing compliance and sustainability reporting. Mobile access and data security features ensure uninterrupted operations, while cost savings and service level agreements offer improved visibility into company performance. Data integration and procurement automation optimize workflows, leading to efficiency gains and time savings. Performance management, supplier diversity, and access control are essential components, fostering stronger relationships with companies. RFI management, company performance scorecards, implementation services, and workflow automation further enhance the capabilities of these solutions.

Invoice processing, return on investment, and improved communication channels facilitate seamless transactions and collaboration. Data encryption, support services, and on-premises solutions provide additional security measures, ensuring peace of mind. Disaster recovery, payment processing, real-time visibility, and contract lifecycle management are critical elements for businesses seeking to mitigate risk and maintain operational continuity. Cloud-based solutions, reporting dashboards, and collaboration tools offer flexibility and convenience, while consulting services and API integrations cater to specific business needs. The ongoing evolution of vendor management software continues to reshape the business landscape, offering innovative solutions for enhancing efficiency, reducing risk, and fostering strong supplier relationships.

How is this Vendor Management Software Industry segmented?

The vendor management software industry research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in 'USD million' for the period 2025-2029, as well as historical data from 2019-2023 for the following segments.

End-user

  Retail
  BFSI
  Manufacturing
  Others


Deployment

  On-premises
  Cloud-based


Revenue Stream

  Subscription-based
  License-based
  Freemium models
  Pay-per-use


Geography

  North America

    US
    Canada
    Mexico


  Europe

    Germany
    Russia
    UK


  APAC

    China
    India
    Japan
    South Korea


  Rest of World (ROW)

By End-user Insights

The retail segment is estimated to witness significant growth during the forecast period. In today's competitive retail landscape, managing company relationships and procurement processes efficiently is crucial for businesses to minimize costs, mitigate risks, and ensure service excellence. Retail sectors such as healthca

Vendor Risk Management Market Outlook

As of 2023, the global vendor risk management market size is estimated to be approximately USD 5 billion, with expectations to grow at a compound annual growth rate (CAGR) of 13.5% to reach around USD 13 billion by 2032. The growing complexities of supply chains, coupled with heightened regulatory requirements and the increasing necessity for robust risk management frameworks, are key factors propelling this market's expansion. Organizations are becoming increasingly aware of the potential risks posed by third-party vendors, driving a substantial shift towards more comprehensive vendor risk management solutions. This market is witnessing significant growth as businesses strive to protect their data integrity and maintain compliance with evolving global standards.

A primary factor fueling the growth of the vendor risk management market is the increasing pressure from regulatory bodies across various industries. As data breaches and cyber threats grow more sophisticated, regulatory standards have tightened, compelling organizations to adopt rigorous vendor risk management practices. Regulatory compliance offers a dual benefit: it helps organizations avoid hefty fines and sanctions, while also enhancing their reputational standing by demonstrating a commitment to security and data privacy. Additionally, the global inclination towards digital transformation has led to a surge in outsourcing IT services, further necessitating effective vendor risk management strategies to safeguard against potential risks associated with external vendors.

Another significant driver of market growth is the escalating reliance on third-party vendors for critical business operations. As companies continue to outsource key functions to improve efficiency and cut costs, they are becoming more exposed to vendor-related risks. This trend is particularly pronounced in sectors such as BFSI and healthcare, where sensitive data management is crucial. Organizations are increasingly investing in sophisticated vendor risk management solutions that offer real-time risk assessment, comprehensive risk profiles, and continuous monitoring capabilities. These tools are vital in identifying, evaluating, and mitigating potential risks posed by third-party partners, making them indispensable in todayÂ’s interconnected business environment.

The rising adoption of cloud-based solutions is another growth factor in this market. Cloud computing provides organizations with scalable and flexible solutions that are cost-effective and easily manageable. The shift towards cloud-based vendor risk management systems is driven by their ability to provide seamless integration, real-time updates, and enhanced collaboration between stakeholders. These systems offer advanced analytics and reporting functionalities, enabling organizations to make informed decisions swiftly. The agility and efficiency afforded by cloud solutions are particularly appealing to small and medium enterprises (SMEs), which often operate with limited resources yet face similar risk exposure as larger enterprises.

Supply Chain Risk Management has become an integral component of vendor risk management strategies, as organizations face increasing challenges in navigating complex global supply chains. With the rise of globalization, companies are now more interconnected than ever, relying on a vast network of suppliers and vendors across different regions. This interconnectedness, while beneficial for operational efficiency, also introduces a myriad of risks, including disruptions due to geopolitical tensions, natural disasters, and cyber threats. As such, businesses are prioritizing supply chain risk management to ensure continuity and resilience in their operations. By implementing robust risk management frameworks, organizations can better anticipate potential disruptions, assess their impact, and develop contingency plans to mitigate these risks effectively.

Regionally, North America holds the largest share of the vendor risk management market, driven by the presence of major market players and stringent regulatory frameworks. The Asia Pacific region, however, is expected to witness the fastest growth during the forecast period, fueled by rapid digitalization and the increasing adoption of vendor risk management solutions across industries. European markets are also significant, due to the stringent GDPR regulations that compel companies to adopt robust vendor management practices. Meanwhile, Latin America and the Middle East & Africa regions are gradually emb

The Third-Party Risk Management (TPRM) solution market is experiencing robust growth, driven by increasing regulatory scrutiny, the expanding attack surface due to digital transformation, and the growing reliance on third-party vendors across various industries. The market, estimated at $15 billion in 2025, is projected to exhibit a Compound Annual Growth Rate (CAGR) of 12% from 2025 to 2033, reaching approximately $45 billion by 2033. This expansion is fueled by several key factors. Firstly, stringent data privacy regulations like GDPR and CCPA necessitate robust TPRM programs to mitigate risks associated with data breaches and compliance failures. Secondly, the increasing sophistication of cyberattacks necessitates proactive risk assessment and management of third-party vendors, who often represent a significant vulnerability point. Thirdly, the shift towards cloud-based solutions is driving demand for TPRM platforms that can effectively manage risks across hybrid IT environments. Finally, the growing awareness among organizations about the financial and reputational implications of third-party risk failures is fostering wider adoption. Market segmentation reveals significant opportunities within the cloud-based TPRM segment, which is expected to dominate due to its scalability, cost-effectiveness, and accessibility. The manufacturing, financial services, and healthcare sectors are key verticals driving market growth, given their high reliance on third-party vendors and stringent regulatory compliance requirements. While the market faces restraints such as the high cost of implementation, the complexity of integrating TPRM solutions with existing systems, and the lack of skilled professionals, the overall growth trajectory remains positive, driven by the imperative to secure business operations and protect sensitive data in an increasingly interconnected world. The competitive landscape comprises established players like RSA Archer and MetricStream, along with emerging companies offering innovative solutions, fostering innovation and competition within the market.

In today's rapidly evolving digital landscape, organizations are increasingly reliant on third-party vendors to bolster their operations and drive efficiency. This reliance has brought to the forefront the critical need for effective IT Vendor Risk Management Tools, which assist businesses in evaluating, monitoring,

An October 2021 survey of Canadian tech and security executives found that more than 50 percent of organizations had audited or verified third parties or suppliers' security posture and compliance. A further share of 43 percent of the organizations refined our criteria for onboarding and ongoing assessments of third parties. Among surveyed organizations, 27 percent terminated the partnership with certain third parties as an attempt to establish a more profound third-party risk management.

Risk Management Software Market Outlook

In 2023, the global risk management software market size is estimated to be valued at approximately USD 10 billion and is projected to reach around USD 20 billion by 2032, reflecting a Compound Annual Growth Rate (CAGR) of about 9%. This significant growth can be attributed to the increasing necessity for organizations to identify, assess, and mitigate various risks in an evolving and complex business environment. The exponential rise in cyber threats, regulatory changes, and the need for compliance have all been major drivers for the growth of this market.

One of the primary growth factors is the increasing incidence of cyber-attacks and data breaches, which have compelled organizations to adopt advanced risk management solutions. As businesses become more digital, the risk landscape has expanded to include not just financial and operational risks, but also significant cybersecurity risks. These solutions help in identifying vulnerabilities and implementing adequate measures to prevent data breaches, thereby safeguarding organizational assets and reputations.

Another factor driving market growth is the stringent regulatory requirements imposed by governments and regulatory bodies across various regions. Organizations are compelled to comply with a myriad of regulations pertaining to data privacy, financial reporting, and operational transparency. Risk management software provides the necessary tools to ensure compliance, reducing the likelihood of legal penalties and fostering a culture of accountability and transparency within the organization.

Moreover, the advent of advanced technologies such as Artificial Intelligence (AI) and Machine Learning (ML) has revolutionized risk management practices. These technologies enable predictive analytics, which helps organizations in identifying potential risks and implementing proactive measures. The integration of AI and ML in risk management software has significantly enhanced its capabilities, making it a crucial asset for businesses aiming to navigate through uncertainties and complexities.

Regionally, North America holds a significant share in the risk management software market, driven by the presence of major market players and the high adoption rate of advanced technologies. Europe and Asia Pacific are also witnessing substantial growth due to increasing regulatory requirements and the growing awareness about the benefits of risk management solutions. The market in the Middle East & Africa, although smaller, is expected to grow steadily, driven by the ongoing digital transformation initiatives in the region.

Vendor Risk Management has become increasingly crucial as organizations strive to mitigate potential risks associated with third-party vendors. As businesses expand their operations globally, they often rely on a network of vendors and suppliers, which can introduce new risks related to data security, compliance, and operational continuity. Implementing a robust Vendor Risk Management strategy allows organizations to assess and monitor the risk profiles of their vendors, ensuring that they align with the company’s risk tolerance and compliance requirements. By leveraging advanced risk management software, businesses can automate the vendor risk assessment process, enabling more efficient and effective management of vendor-related risks. This not only helps in safeguarding organizational assets but also enhances the overall resilience of the business in the face of potential disruptions.

Component Analysis

The risk management software market can be segmented by component into software and services. The software segment encompasses various solutions such as risk assessment software, compliance management software, and incident management software, which are designed to address the multifaceted nature of organizational risks. The increasing complexity of risk environments across industries necessitates the use of advanced software tools that offer real-time risk assessment and mitigation capabilities. These solutions are being increasingly integrated with other enterprise systems to provide a holistic view of the risk landscape, thereby facilitating informed decision-making.

On the other hand, the services segment includes consulting, implementation, training, and support services. Consulting services are critical as they help organizations in identifying the right risk management solutions tailo

In 2019, Tenable had the largest global market share within the device vulnerability management market, with 27.6 percent. Tenable's revenue was approximately 340 million U.S. dollars in that same year. The total device vulnerability management market generated over 1.2 billion U.S. dollars in 2019.

Third-Party Risk Management Software Market Outlook

The global third-party risk management software market size was valued at approximately USD 4.5 billion in 2023 and is expected to reach around USD 12.8 billion by 2032, growing at a CAGR of 12.5% during the forecast period from 2024 to 2032. This substantial growth is driven by increasing regulatory requirements, the rising complexity of global supply chains, and the accelerating digital transformation across various industries.

One of the primary growth factors for the third-party risk management software market is the escalating regulatory landscape. Governments and regulatory bodies worldwide are imposing stricter regulations on industries to ensure that companies maintain robust risk management practices. These regulations often require businesses to have a comprehensive understanding of their third-party relationships and to ensure that these entities comply with relevant laws and standards. As a result, businesses are increasingly adopting third-party risk management software to streamline compliance processes and mitigate risks associated with third-party engagements.

Another significant driver of market growth is the increasing complexity of supply chains. In today's globalized and interconnected economy, businesses often rely on a vast network of suppliers, distributors, and other third-party entities. Managing the risks associated with these relationships is becoming increasingly challenging, especially as supply chains grow more complex. Third-party risk management software provides businesses with the tools they need to effectively monitor and manage these risks, ensuring the continuity and resilience of their operations.

Digital transformation is also playing a crucial role in driving the adoption of third-party risk management software. As businesses increasingly embrace digital technologies to enhance their operations, they are also becoming more vulnerable to cyber threats. Third-party entities, such as vendors and service providers, can be potential points of entry for cyber-attacks. To protect their digital assets and maintain a strong security posture, businesses are turning to third-party risk management software to identify and mitigate potential cyber risks associated with their third-party relationships.

In this context, Insider Threat Management ITM Software is becoming increasingly relevant. As organizations expand their digital ecosystems and integrate more third-party entities, the risk of insider threats grows. These threats can originate from employees, contractors, or partners who have access to sensitive data and systems. ITM software provides organizations with the tools to monitor and analyze user behavior, detect anomalies, and prevent potential data breaches. By incorporating ITM solutions, businesses can enhance their security posture and protect against both internal and external threats, ensuring that their third-party engagements do not compromise their operations.

From a regional perspective, North America holds a significant share of the third-party risk management software market, driven by the presence of major market players and stringent regulatory requirements. Europe is also a key market, with the General Data Protection Regulation (GDPR) and other regional regulations driving the adoption of risk management solutions. The Asia Pacific region is expected to witness the highest growth rate during the forecast period, fueled by rapid economic development, increasing digitalization, and rising awareness of risk management practices among businesses.

Component Analysis

The third-party risk management software market can be segmented by component into software and services. The software segment is anticipated to hold the largest market share during the forecast period. This segment includes various types of software solutions designed to help businesses identify, assess, and mitigate risks associated with their third-party relationships. These software solutions often include features such as risk assessment tools, compliance management, and vendor performance monitoring. The increasing need for comprehensive and automated risk management solutions is driving the growth of the software segment.

Within the software segment, cloud-based solutions are gaining significant traction. Businesses are increasingly adopting cloud-based third-party risk management software due to its scalabili

According to Cognitive Market Research, The global third-party risk management market size is USD 5.5 billion in 2023 and will expand at a compound annual growth rate (CAGR) of 17.20% from 2023 to 2030.

The demand for third party risk managements is rising due to Resource optimization to protect the interests of millions of digital financial service consumers.
Demand for cloud remains higher in the third party risk management market.
The BFSI category held the highest third party risk management market revenue share in 2023.
North American third party risk management will continue to lead, whereas the European third party risk management market will experience the most substantial growth until 2030.

Rising Instances of Cyber-attacks and Frauds in Digital Financial Services to Provide Viable Market Output

With greater internet penetration, the deployment of smart technology has enhanced the appeal of digital financial services such as mobile banking and digital payments. Because of the growth of digital services, businesses must adapt and incorporate sophisticated technologies into their offerings. However, as the use of digital payment systems in the BFSI sector has grown, so have the risks of cyber-attacks and fraud. BFSI stakeholders are investing heavily to protect their clients from such disasters. The market for third-party risk management will develop as resources are optimized to protect the interests of millions of users of digital financial services.

Growing digitization of Businesses to Propel Market Growth

Industry automation and digitization have exacerbated data privacy and security breaches. With growing digitization, various stakeholders become involved, heightening safety issues. This spike in third-party involvement is propelling the third-party risk management market, raising associated hazards. As industries increasingly rely on external partners and vendors, the need for robust risk management solutions to protect against potential vulnerabilities and ensure the integrity of sensitive data becomes critical in the midst of an evolving landscape of technological advancements and increased interconnectivity.

Market Dynamics of Third Party Risk Management

High Capital Expenditure to Restrict Market Growth

Third-party risk management necessitates specialized resources and staff skilled in risk identification and mitigation. Providing dedicated services for comprehensive risk management responsibilities on behalf of large corporations necessitates significant capital outlays. The cost of acquiring and sustaining these resources is considerable, which could be a hindrance to market expansion. The costs of developing and maintaining effective third-party risk management solutions may discourage some entities, particularly small enterprises, from fully embracing these services. Striking a compromise between the requirement for strong risk management and the related expenditures is critical for promoting wider adoption and sustaining the third-party risk management market's growth.

Impact of COVID–19 on the Third Party Risk Management Market

The COVID-19 pandemic has had a substantial impact on the growth of the third-party risk management business. As a result, COVID-19 had a positive impact on the market. According to a third-party threat control analysis, COVID-19 has harmed multiple global markets by disrupting supply chains as a result of market restrictions and logistics prohibitions implemented by countries all over the world. However, a few markets benefited from the pandemic's consequences. The COVID-19 epidemic has resulted in a 600% surge in cybercrime, which includes anything from theft to data hacking and destruction. Every industry has had to adopt new technologies, requiring organizations to act quickly in order to adapt. Introduction of Third Party Risk Management

Third-party risk management is risk management that focuses on identifying and mitigating risks linked with the use of third parties. The discipline is meant to assist organizations in understanding the third parties with whom they collaborate, how they collaborate, and the security mechanisms in place. Businesses are increasingly relying on third parties to boost profitability, reduce time to market, obtain a competitive advantage, and decrease costs. Third-party threat control is typically necessary once every day and continues throughout the day. Th...

This statistic shows the security and vulnerability management market share held by some of the segment's largest vendors worldwide in 2015 and 2016. In 2016, IBM controlled 13 percent of the security and vulnerability management market. That same year, the overall security and vulnerability management market was worth close to 6 billion U.S. dollars.

As of 2019, Tenable dominates the worldwide device vulnerability management market, generating close to 340 million U.S. dollars, in a market worth 1.2 billion U.S. dollars. Other significant vendors in 2019 include Qualys, Rapid7, and IBM.

In 2020, the market size of third party cloud management services in China amounted to around 0.68 billion U.S. dollars. Third party cloud management services refer to consultation, development, operating and maintenance of cloud services offered by third parties.

In 2024, SAP Extended Warehouse Management was the leading vendor of the global warehouse management software market, with a 21 percent market share. The source specifies that warehouse management software assists in managing the operations of a warehouse or distribution center.

In 2022, Demand Planning led the supply chain management (SCM) software market with a market share of 35 percent. Other vendors following Demand Planning in terms of market share were JDA, SAP Supply Chain Management and o9. As noted by the source, SCM software is commonly used for creating and fulfilling demands for goods and services.

The Vendor Management Systems (VMS) market is a dynamic and rapidly evolving sector that plays a crucial role in helping organizations streamline their procurement processes, effectively manage supplier relationships, and enhance operational efficiency. VMS solutions are designed to facilitate the management of exte

The Vendor Management System (VMS) Software market has experienced robust growth over the past few years, driven by the increasing need for organizations to optimize their supply chain processes and manage vendor relationships more efficiently. VMS software provides companies with a comprehensive platform to manage

The Vendor Management Software Market report segments the industry into By Deployment (On-premise, Cloud), By End-user Industry (Retail, BFSI, Manufacturing, IT & Telecommunications, Other End-user Industries), and By Geography (North America, Europe, Asia, Australia and New Zealand, Latin America, Middle East and Africa). Five years of historical data and five-year forecasts are included.