The Future of Third-Party Risk Management: Seven Key Predictions for 2025

As organizations gear up for 2025, third-party risk management (TPRM) remains a top priority. The need to manage risks associated with vendors and partners has grown more urgent, driven by new regulations, geopolitical tensions, and supply chain vulnerabilities. In today’s interconnected business environment, a partner’s weak security posture can quickly become your organization’s liability. Here are seven predictions for how TPRM will evolve to address these changing risks in 2025.

1. AI Will Drive Predictive Insights and Streamline Processes

Artificial intelligence (AI) is becoming a cornerstone of TPRM, enabling organizations to automate risk assessments, identify patterns in large datasets, and spot potential issues faster. Leveraging Large Language Models (LLMs) will help identify inconsistencies in documentation and responses. However, successful AI implementation will require robust data security, governance, and transparency frameworks. With only 5% of organizations actively using AI for TPRM in 2024, this number is expected to rise as businesses close governance gaps and embrace automation.

2. Regulations Will Tighten and Push for Elevated Due Diligence

Governments and regulatory bodies worldwide are strengthening third-party risk management requirements, particularly in data privacy, ESG (environmental, social, and governance), and operational resilience. Companies must assess third-party suppliers and partners more rigorously, emphasizing resilience and environmental impact to align with evolving regulations.

In the U.S., the EU Digital Operational Resilience Act (DORA) is emerging as a potential model for operational resilience standards, particularly within the financial sector. This aligns with efforts from regulatory bodies like the U.S. Office of the Comptroller of the Currency (OCC), signaling a broader push for stringent due diligence. Meanwhile, ESG mandates such as the EU’s CSRD and CSDDD will require businesses to evaluate supplier practices, including carbon emissions, labor conditions, and ethical sourcing. These changes highlight the growing need for robust compliance strategies to meet regional and global regulatory demands.

3. Geopolitical Instability Will Demand Closer Monitoring

Political and regional instability—such as the ongoing crises in Ukraine and the Red Sea—is prompting organizations to scrutinize their extended ecosystems closely. Companies will focus on analyzing ultimate business owners (UBOs) and regional concentration risks to anticipate disruptions and avoid sanctions. Expanding vendor firmographic data will mitigate downtime and ensure operational continuity.

4. TPRM Will Be Embedded into Enterprise Culture

Organizations will adopt a more collaborative approach as TPRM shifts from an IT-led initiative to an enterprise-wide responsibility. Procurement teams, risk managers, and other stakeholders will play more significant roles in sourcing, due diligence, and vendor offboarding. This cultural shift will ensure that TPRM is fully integrated into broader business processes, fostering better coordination and risk mitigation.

5. Centralized Risk Reporting Will Become Essential

Boards and senior leadership increasingly demand consolidated views of internal and external risks. Organizations will integrate TPRM into their governance, risk management, and compliance (GRC) frameworks to meet this need. Unified key risk indicators will provide business-impact-focused insights that are accessible to both technical and non-technical stakeholders, enabling more informed decision-making.

6. Aggregated Risk Monitoring Will Strengthen Resilience

The rise in third-party cybersecurity incidents underscores the importance of assessing interconnected risks across ecosystems. Continuous monitoring across multiple domains—cyber, operational, reputational, ESG, and financial—will become standard practice. Real-time data insights will enable organizations to respond more effectively to emerging threats, bolstering supply chain resilience.

7. Third-Party Data Breaches Will Reach a Critical Point

Third-party cybersecurity incidents have surged in recent years, affecting over 60% of companies in 2024. These breaches are also growing in severity, with millions of people impacted. In 2025, cybercriminals are expected to target third parties supporting high-profile industries such as healthcare, finance, and education. Proactive risk management will be critical to mitigating these threats.

Preparing for the Future

The evolution of third-party risk management is accelerating. From adopting AI to stricter regulations and focusing on resilience, organizations must adapt quickly to the changing landscape. By embracing innovation and prioritizing governance, companies can turn TPRM challenges into sustainable growth and success opportunities in 2025.

About the Author

Alastair Parr is the Executive Director of GRC Solutions at Mitratech. He offers over 15 years of experience in product management, consultancy, and operations. He ensures that customer and market demands are considered and applied innovatively within the Prevalent solution portfolio. Parr comes from a governance, risk, and compliance background, developing and driving solutions to the ever-complex risk management space. Follow him on LinkedIn.