Vendor risk management (VRM) has become an essential discipline for organizations seeking to safeguard their operations from risks posed by third-party suppliers, contractors, and service providers. As businesses increasingly rely on complex, global vendor ecosystems, managing risks related to cybersecurity, compliance, operational continuity, and reputational damage is critical. In 2025, VRM is evolving with innovations in AI-driven continuous monitoring, automation, and integrated risk insights, helping companies proactively address vendor vulnerabilities amid an expanding threat landscape and regulatory scrutiny.

According to Straits Research, the global vendor risk management sector was valued at USD 11.1 billion in 2024 and is projected to grow from USD 12.79 billion in 2025 to reach USD 39.69 billion by 2033, registering a compound annual growth rate (CAGR) of 15.21% during the forecast period (2025–2033).

Key Trends and Innovations in Vendor Risk Management

• AI-Powered Continuous Vendor Monitoring: AI enables real-time analysis of vast data sources—including cybersecurity posture, compliance certifications, financial health, and geopolitical risks—offering dynamic risk scoring far beyond traditional point-in-time assessments. This constant vigilance allows organizations to detect emerging threats and react swiftly, moving VRM from reactive to predictive risk management.

• Automation of Risk Assessments and Workflows: Manual vendor assessments and questionnaires are increasingly replaced by automated workflows that streamline onboarding, due diligence, and ongoing evaluation. Integration with governance, risk, and compliance (GRC) systems ensures seamless reporting and mitigation planning across departments, reducing human error and administrative overhead.

• Comprehensive Third-Party Ecosystem Visibility: Modern VRM platforms provide centralized, up-to-date inventories of all vendors, segmented by risk level, criticality, and data access. This holistic view supports nuanced prioritization and resource allocation, ensuring high-risk vendors receive enhanced scrutiny and continuous controls.

• Supply Chain Resilience and ESG Focus: Awareness of environmental, social, and governance (ESG) factors is becoming a critical component of vendor risk programs, with companies deploying tools to evaluate suppliers’ sustainability practices and ethical conduct. This trend aligns vendor risk management with broader corporate responsibility goals.

• Integration of Cyber Threat Intelligence: Incorporating external threat intelligence feeds enriches vendor risk data with contextual information on active cyber risks, vulnerabilities, and breach incidents affecting suppliers. This fusion enhances proactive mitigation strategies and incident response preparedness.

Global Landscape and Leading Players

• United States: The US is a VRM technology innovation leader, driven by firms such as CyberSierra, Kodiak Hub, OneTrust Vendorpedia, and LogicManager that emphasize AI-driven continuous monitoring, automated workflows, and integrated risk insights. Organizations ranging from financial services to healthcare are rapidly adopting comprehensive VRM suites to meet stringent regulatory requirements such as HIPAA, SOX, and CCPA. Despite tariff-related cost pressures on cloud infrastructure and semiconductor hardware, US vendors invest aggressively in regional data centers and AI research.

• Europe: European companies like SOTI, Ivanti, SAP Ariba, and Emarsys prioritize GDPR-compliant VRM solutions with strong data privacy, multilingual support, and sustainability assessments. Regulatory frameworks such as the EU Digital Operational Resilience Act (DORA) push enterprises to embed third-party risk controls tightly within enterprise risk management. Cross-border collaborations foster threat intelligence sharing and vendor risk benchmarking across industries.

• China: Providers including Alibaba Cloud, Huawei Cloud, and domestic VRM startups develop real-time supplier monitoring integrated with national cybersecurity mandates and cloud sovereignty policies. Chinese industry beneficiaries include manufacturing, retail, and government sectors, supported by robust government subsidies and data localization initiatives. Amid tariffs and geopolitical shifts, Chinese VRM firms accelerate indigenous AI algorithm development and cloud infrastructure expansion.

• India: Firms such as Zoho, ManageEngine, and Wipro are expanding affordable, scalable VRM platforms that cater to India’s growing SMEs and enterprise segments. Government programs fostering digitalization and startup innovation drive VRM adoption. Indian companies focus on ease of use, automation, and compliance with emerging privacy regulations, offering competitive alternatives for global outsourcing vendors.

• Japan and South Korea: Technology companies like NEC, Samsung SDS, and regional VRM specialists focus on integrating VRM with advanced 5G networks and IoT device security, addressing risks in automotive, electronics, and financial sectors. Emphasis on zero-trust models and continuous authentication aligns with regional cybersecurity strategies and digital economy goals.

Impact of Global Tariffs on Vendor Risk Management

While vendor risk management primarily involves software and consulting services, it is indirectly affected by tariffs on semiconductor chips, cloud infrastructure components, and networking equipment essential for hosting VRM platforms and AI compute capabilities. Since 2024, tariffs—particularly between the US, China, and Europe—have raised costs for data centers and cloud hardware, impacting VRM providers’ operational expenses. In response, many vendors are diversifying hardware supply chains, expanding domestic data centers, and investing in chip manufacturing partnerships. Governments in key regions promote local semiconductor fabrication and cloud sovereignty initiatives to reduce supply chain fragilities. Though tariffs impose short-term cost pressures, they foster greater infrastructure resilience and technological localization beneficial to VRM growth.

Recent Industry Updates and News

• In mid-2025, CyberSierra announced enhancements to its AI-powered continuous vendor monitoring platform, introducing automated threat intelligence integration and real-time risk scoring for dynamic vendor profile updates.

• Kodiak Hub launched new compliance automation workflows tailored to ESG reporting and international regulatory frameworks, streamlining supplier sustainability assessments alongside traditional risk criteria.

• OneTrust Vendorpedia expanded its third-party risk management suite with deeper integrations into enterprise GRC platforms and AI-driven incident response capabilities, supporting multi-modal vendor communication.

• Indian firm ManageEngine enhanced its vendor risk module with AI-driven contract risk analysis and multilingual risk reporting, expanding adoption in APAC regions.

• European companies increased cooperative risk intelligence sharing networks, accelerating response times to vendor-related cybersecurity breaches aligned with evolving EU directives.

Outlook and Future Directions

Vendor risk management will continue robust growth through 2033, propelled by expanding global supply chains, escalating regulatory scrutiny, and growing cyber threat complexity. AI innovation, automation, and real-time data integration will remain central to evolving VRM capabilities. Emerging economies will become significant contributors due to increased digital infrastructure investment and vendor ecosystem expansion. Sustainability and ethical sourcing will become core VRM pillars alongside traditional cybersecurity and operational risks. Tariff-driven supply chain diversification and infrastructure localization will further enhance VRM technology reliability and accessibility worldwide. Ultimately, VRM will mature into an indispensable, fully integrated function empowering enterprises to confidently manage their third-party risk landscape.

Summary

Vendor risk management is rapidly advancing through AI-driven continuous monitoring, automation, and integrated risk insights essential for today’s complex global supply chains. Despite indirect tariff impacts on cloud infrastructure costs, innovation and regional localization sustain strong industry growth. The future promises smarter, more proactive VRM solutions fostering resilient, compliant, and responsible vendor ecosystems worldwide.