The landscape of third-party risk management (TPRM) is rapidly evolving as organizations navigate increasing supply chain vulnerabilities, data breaches, and regulatory scrutiny. While 2024 marked significant advancements, 2025 will usher in a new era of business resilience, transparency, and sustainability—fueled by artificial intelligence (AI) and other emerging technologies.
In this post, we’ll explore the top seven predictions for TPRM in 2025, highlighting how businesses can prepare for the future of risk management.
1. AI Will Transform Risk Assessments and Real-Time Monitoring
AI’s role in TPRM is expanding beyond automation—it’s becoming an essential tool for predictive risk management. In 2024, organizations began experimenting with AI-driven workflows to streamline assessments and reporting. However, the real breakthrough in 2025 will come from predictive analytics and comparative reporting that allow organizations to detect potential threats before they escalate.
Key Developments in AI for TPRM:
- Predictive Risk Insights: AI-powered platforms will analyze large datasets in real-time, identifying risk trends and anomalies across third-party ecosystems.
- Enhanced Documentation Review: AI will compare assessment responses with supporting evidence to detect inconsistencies and potential compliance gaps.
- Automated Risk Scoring: Machine learning models will generate risk scores based on historical data, industry trends, and real-time vendor behavior.
Despite these advancements, AI governance and transparency will be crucial. Many companies hesitated to implement AI in 2024 due to concerns over data privacy and regulatory compliance. In 2025, as governance frameworks mature, more businesses will embrace AI-driven TPRM solutions to accelerate risk detection and decision-making.
2. Expanding Regulations Will Drive Harmonized Compliance and Stricter Due Diligence
Regulatory bodies worldwide are intensifying their focus on third-party risk management, particularly in areas like data privacy, environmental, social, and governance (ESG) compliance, and operational resilience. Businesses operating across multiple jurisdictions will face more complex regulatory landscapes, but we may also see greater efforts to harmonize compliance requirements.
Notable Regulatory Trends in 2025:
- Operational Resilience Regulations: Frameworks like the Digital Operational Resilience Act (DORA) will extend beyond financial services, pushing industries to establish stricter third-party resilience measures.
- ESG Compliance: Laws such as the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) will require businesses to scrutinize suppliers’ sustainability practices, from carbon footprints to ethical labor sourcing.
- Data Protection Laws: With data privacy regulations evolving globally, businesses will need to enhance third-party data governance to comply with stricter mandates.
Organizations must proactively assess and document compliance across their vendor ecosystems, ensuring alignment with these expanding regulations.
3. Geopolitical Risks Will Increase the Need for Concentration Risk Analysis
Global instability is reshaping third-party risk management. Regional conflicts, trade tensions, and political instability in the Middle East, East Africa, the South China Sea, and Ukraine have already disrupted supply chains. In 2025, businesses will double down on concentration risk analysis to mitigate these geopolitical uncertainties.
Key Areas of Focus:
- Ultimate Beneficial Ownership (UBO) Analysis: Companies will enhance transparency into who owns and controls third-party entities to prevent exposure to sanctioned organizations.
- Regional and Sectoral Risk Tracking: Organizations will map their vendor ecosystems to identify overreliance on specific countries or industries prone to geopolitical disruptions.
- Diversification Strategies: Businesses will seek to broaden supplier bases and reduce dependence on vendors concentrated in high-risk regions.
Geopolitical risk intelligence will become an integral part of vendor due diligence as companies prioritize operational resilience.
4. Third-Party Risk Management Will Become an Enterprise-Wide Priority
For years, IT security teams led third-party risk management, primarily focusing on cybersecurity risks. However, as third-party dependencies grow across all business functions, TPRM will shift into a cross-functional discipline.
Expected Changes in TPRM Ownership:
- Enterprise Risk Management (ERM) Integration: TPRM will be embedded into ERM frameworks, ensuring that third-party risks are assessed alongside broader business risks.
- Procurement’s Expanding Role: Procurement teams will take on greater responsibility in vendor selection, due diligence, and risk monitoring.
- Collaboration Across Departments: Legal, compliance, and finance teams will actively contribute to TPRM efforts, ensuring a holistic approach to vendor risk management.
By embedding TPRM into the organizational culture, companies can achieve more comprehensive risk management outcomes.
5. Centralized GRC and TPRM Reporting Will Be Essential for Board Oversight
Boards of Directors and senior executives demand clearer, consolidated insights into enterprise risks. In 2025, organizations will move toward centralized risk reporting that integrates third-party risks with broader governance, risk, and compliance (GRC) metrics.
How Centralized Risk Reporting Will Improve Decision-Making:
- Unified Risk Dashboards: TPRM platforms will consolidate internal and external risk factors, offering a single pane of glass for board reporting.
- Business Impact Scoring: Third-party risks will be assessed not just on their likelihood but on their financial, operational, and reputational impact.
- Standardized Key Risk Indicators (KRIs): Organizations will establish KRIs that align TPRM with business objectives, making risk assessments more actionable.
This shift will enhance executive-level risk awareness and ensure that third-party risks are effectively managed across the enterprise.
6. Risk Aggregation Will Strengthen Business Resilience
The growing frequency of third-party incidents means businesses must evaluate risk across their entire ecosystem, rather than just at an individual vendor level. Risk aggregation will be a major focus in 2025, helping organizations understand how interconnected risks can cascade through supply chains.
Best Practices for Aggregating Risk Insights:
- Continuous Risk Monitoring: Businesses will adopt real-time monitoring tools to track vendor risk fluctuations across multiple domains (cyber, operational, ESG, financial, etc.).
- Scenario Modeling: Companies will use AI to simulate worst-case risk scenarios and test their resilience against third-party failures.
- Incident Response Coordination: Organizations will establish cross-functional response teams to address third-party disruptions efficiently.
By shifting from point-in-time risk assessments to continuous ecosystem monitoring, companies can reduce downtime and operational disruptions.
7. Third-Party Security Incidents Will Hit a Tipping Point
Cybercriminals are increasingly targeting third-party vendors as entry points into larger organizations. The number of third-party breaches skyrocketed in recent years, affecting industries like healthcare, financial services, and critical infrastructure. In 2025, this trend will accelerate, with attackers expanding their focus to high-profile but less-protected sectors like:
- Educational institutions
- State and local governments
- Manufacturers and logistics providers
Organizations must strengthen vendor security controls, enforce contractual security requirements, and improve breach response capabilities to mitigate the rising tide of third-party cyber threats.
Preparing for the Future of TPRM
As third-party risk management continues to evolve in 2025, organizations must proactively adopt new technologies, regulatory frameworks, and resilience strategies. AI-driven automation, regulatory harmonization, and a focus on aggregated risk insights will shape the next generation of TPRM programs.
Next Steps for Businesses:
✅ Implement AI-powered risk assessment and monitoring tools.
✅ Strengthen compliance programs in anticipation of new regulations.
✅ Improve vendor resilience planning through diversified sourcing.
✅ Integrate TPRM into enterprise risk management frameworks.
✅ Enhance cybersecurity protocols for third-party relationships.
By embracing these trends, organizations can stay ahead of emerging risks, enhance business resilience, and build stronger partnerships with their third-party ecosystem.
