Third-party risk management refers to the process of identifying, assessing, and mitigating risks that arise from the use of third-party vendors, suppliers, or service providers. In today's interconnected business environment, organizations rely heavily on third-party vendors to meet various business needs, including technology, operations, and supply chain management. While these partnerships bring many benefits, they also introduce new risks, including cyber threats, reputational damage, and regulatory compliance issues.
Effective third-party risk management involves a comprehensive approach that includes due diligence, contract negotiations, ongoing monitoring, and incident response planning. It requires close collaboration between different departments, including legal, compliance, information security, and vendor management. Organizations must identify potential risks, evaluate the severity and likelihood of those risks, and develop strategies to mitigate or avoid them.
By implementing robust third-party risk management practices, organizations can protect their reputation, reduce their exposure to cyber threats, and ensure compliance with regulatory requirements. It is essential to take a proactive approach to third-party risk management to maintain the trust of customers, investors, and other stakeholders.
Global third-party risk management market size is expected to reach USD 14.33 billion by 2030, according to a new study by Polaris Market Research.
With the dominance of branded products and the rising prevalence of diseases in the region, North America dominated the market in terms of revenue in 2021. The rise of malware and cyber fraud will directly encourage the demand for third-party threat control solutions. Cyberattacks were regarded as the fifth worst danger in 2020, but they have since come to be expected in both the public and private sectors.
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This dangerous industry is expected to keep growing in 2022, with IoT cyberattacks alone expected to rise by 2030. According to the World Economic Forum's 2020 Global Risk Report, the rate of detection (or prosecution) in the United States is as low as 0.05 percent. Third-party risk management is a subset of risk management that focuses on identifying and reducing risks related to the use of third parties.
The discipline's goal is to give organizations the knowledge they need to comprehend the third parties they interact with, how they work with them, and the security precautions those third parties have in place. Businesses are relying on third parties more and more to boost profitability, reduce time to market, gain a competitive edge, and reduce expenses.
Data breaches are happening more often in all types of organizations. Centralized data safety and security solutions are receiving significant investment from large enterprises. This has increased the industry's potential for growth. A fast increase in the use of cloud-based data platforms to manage and mitigate difficulties with data theft and cyber security is boosting the industry's growth pace.
Other significant market drivers throughout the projection period include growing urbanization, industrialization, and the growing requirement to derive in-depth insights from expanding data quantities and perform benchmarking. Additionally, it is projected that increasing enterprise investment in data storage facilities, combined with rising demand for streamlined access to organizational data from departmental silos, will fuel the third-party threat control industry.
Third-Party Risk Management Market Report Highlights
- Professional services sector is expected to grow during the forecast period. This growth is attributed to the simplicity of implementation, aggressive price points, robust security measures, and new integrated technologies.
- Cloud sector accounted for the largest market share over the forecast period due to high-speed secure transfers and multi-layered software that boosts productivity and analyzes potential threats are the driving forces behind the expansion of huge businesses.
- North America is expected to grow at a significant CAGR over the projected period on account of fast-acting insulin demand in the region is being driven by quick digitization, increasing integration of cutting-edge technology, and rising cyberattacks with sophisticated data breaches.
- The global market is highly competitive owing to the existence of large market players with a global presence including RSA, Genpact, MetricStream, Deloitte, KPMG, Bit Sight Technologies, Ernst & Young, PwC, Process Unity, Ven minder, Resolver, NAVEX Global.