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Liminal Predicts Dramatic Growth in Third-Party Risk Management

According to a recent analysis by Liminal, a leader in market intelligence technology, global expenditures on third-party risk management (TPRM) solutions are projected to soar from $9 billion in 2025 to an impressive $19.9 billion by 2030. This anticipated growth reflects an accelerating focus by businesses on safeguarding their data, operations, and brand reputations amid burgeoning third-party ecosystems and escalating cybersecurity threats.

As the complexity of managing third-party relationships rises, so do the security risks. The report highlights that organizations today oversee more than 250 vendor relationships on average. However, fewer than half of these organizations engage in continuous monitoring of their vendors. With traditional reliance on static questionnaires and annual audits, only a meager 9% of practitioners express confidence in their TPRM assessments. This becomes increasingly concerning given the tightening compliance landscape, exemplified by significant GDPR penalties. Furthermore, evolving threats, particularly cyberattacks powered by AI, have rendered many current TPRM methodologies fossilized and ineffective.

While most firms acknowledge the importance of advancing their TPRM budgets, obstacles such as fragmented funding and isolated data impede progress. The report indicates that companies that embrace strategies emphasizing continuous monitoring, automation, and integrated solutions gain a competitive edge. By moving away from outdated, error-prone practices toward a proactive, data-centric approach, leaders can proactively identify vulnerabilities, enhance compliance with regulations, and build stronger trust throughout their supply chains.

Travis Jarae, CEO of Liminal, emphasized the necessity for organizations to pivot from basic compliance practices to continuous, foresighted risk intelligence, saying, "With TPRM spending nearly doubling and fewer than half of organizations conducting real-time checks, the data shows a clear mandate. It's time to evolve from basic tasks to continuous, forward-looking risk intelligence. Leading companies are leveraging automation and integrated analytics to stay ahead of potential threats, thus transforming risk management into a strategic asset."

Key Insights from the Market Study

1. Significant Market Expansion: TPRM expenditure is on track to more than double, showcasing a compound annual growth rate (CAGR) of 17.1%, driven by rising cybersecurity threats and evolving regulations.
2. Maturity Lag: Current capabilities in TPRM remain stagnant, with only 9% of businesses demonstrating advanced readiness, leaving many unprepared to protect their operations.
3. Access to Information: Less than half of organizations actively monitor their third-party relationships, with many deeming conventional assessment techniques too complex and unreliable.
4. Actionable Risk Awareness: Companies recognize the need for addressing AI governance and cloud security gaps, yet urgency has not translated into proactive measures for many.
5. Future-Ready Strategies: About 42% of firms aspire to adopt advanced TPRM solutions within two years, particularly in light of emerging AI and cloud challenges.
6. Budget Allocation Issues: Recently, many businesses invested only 10% or less of their essential risk management budgets to TPRM, perpetuating fragmented expenditure.
7. Importance of Data and Automation: With 86% of surveyed practitioners prioritizing accurate data and 82% deeming automation vital, integrating real-time solutions is essential for closing risk gaps.
8. Shift Towards Continuous Monitoring: In the upcoming two years, a greater number of firms plan to allocate resources toward always-on monitoring systems to enhance responsiveness to new threats.

Joe Stuntz, Principal Advisor at Liminal, remarked, "With the stakes at an all-time high, from healthcare providers protecting patient information to financial institutions navigating compliance complexities, leaders who invest in real-time solutions not only mitigate risks but also position themselves for long-term growth and trust in an increasingly digital economy."

Conclusion

Liminal’s insights underscore a clear pathway for organizations navigating the evolving landscape of third-party risks. Continuous monitoring, automation, and data-driven insights are no longer optional but essential strategies for ensuring operational integrity and maintaining competitive advantage in a rapidly changing marketplace.

For more information regarding Liminal’s findings, visit Liminal.co.