The Top 7 TPRM Predictions for 2025

The practice of third-party risk management (TPRM) is evolving rapidly due to growing concerns about supply chain vulnerabilities, data breaches, and regulatory pressures. While 2024 proved to be quite eventful in third-party risk management, developments in 2025 will drive a heightened focus on business resilience, transparency, and sustainability facilitated by AI and other related technologies.

This post examines the top 7 predictions for third-party risk management in 2025.

#1. AI Will Enable Predictive and Comparative Reporting and Accelerate Assessment and Documentation Workflows

2024 was the year that AI had its breakthrough in TPRM, so it stands to reason that AI and machine learning will continue to play a critical role in 2025 as organizations mature their AI usage to automate risk assessments, improve decision-making, and detect potential issues faster.

In 2025, AI-driven systems will help organizations monitor third-party risk in real time by leveraging their large language models (LLMs) to analyze large datasets and identify patterns that could indicate emerging risks. As well, expect AI to enhance how organizations examine supporting evidence and determine contradictions between assessment responses and documentation.

However, strong data security, transparency, and governance policies are essential to AI's success. The numbers bear this out. In 2024, just 5% of companies said they actively used AI in their TPRM programs due to a lack of governance, while 61% were investigating AI use cases. We expect this to change in 2025 as companies become more comfortable using AI to automate tasks and reporting.

#2. Regulatory Expansion Will Harmonize Requirements and Drive Elevated Due Diligence

Governments and regulators worldwide are expected to expand third-party risk management requirements, especially around data privacy, ESG (environmental, social, and governance), and business resilience. Cross-border businesses will face more complex compliance challenges, but we may also see efforts to harmonize regulations globally to simplify compliance.

Companies will increasingly be required to enhance their assessment of third-party suppliers in two primary areas: their resilience and environmental impact. DORA will serve as a source for building broad operational resilience measures in the U.S. financial system complementing the efforts of the Office of the Comptroller of the Currency (OCC). The rise of ESG mandates such as EU CSRD and CSDDD will push businesses to scrutinize their partners' sustainability practices, including carbon footprints, labor practices, and ethical sourcing.

#3. Geo-Political Factors Will Drive Tracking of Potential Concentration and Resilience Risks

Staying on the resilience theme, continual regional instability in the Middle East, East Africa, the South China Sea, and Ukraine will require organizations to examine their extended, Nth party ecosystems. Organizations will seek to anticipate disruptions and head off any potential sanctions concerns with enhanced ultimate business owner (UBO) and key individual analysis. Companies will look to expand vendor firmographic data to seek greater clarity to understand regional and technology concentration risk to reduce the risk of downtime.

#4. Third-Party Risk Ownership Becomes Embedded into Business Culture

For years, third-party risk management was led by IT security teams due to the risks of outsourcing and growing dependencies on IT infrastructures. And while increasing cyber threats and high-profile breaches involving third-party vendors are still concerning, organizations will need to improve collaboration across the organization to achieve risk outcomes. As risks evolve and new ones (even non-security risks) emerge, who will own third-party risk management?

2025 will prove to be a pivotal year when third-party risk shifts to enterprise risk teams so as a discipline it can be more easily integrated into cross-enterprise business processes. Expect procurement teams to play a greater role in TPRM too, as sourcing, due diligence, and vendor offboarding all have strong risk management ties.

#5. Centralized GRC and TPRM Risk Reporting Will Be Required for a Consolidated Board Perspective

By becoming part of the cultural fabric of enterprise risk management, TPRM will naturally evolve toward broader governance, risk management, and compliance (GRC) use cases. Boards of Directors and senior management will require consolidated views of risks – regardless of their internal or external source – scored and explained according to their business impact. Prepare for this trend by creating and reporting on consolidated key risk indicators consumable by business and non-technical audiences.

#6. Risk Aggregation Improves Focus on Business Resilience

Due to the continued pervasiveness of third-party cybersecurity incidents, companies will need to assess not just individual third parties but the aggregate risk across their entire ecosystem. Understanding how interconnected risks from various third parties can cascade and affect the organization will be key to building supply chain resilience.

To prepare for this trend, aggregate continuous monitoring across multiple risk domains, such as cyber, operational, reputational, ESG, and financial. With real-time data and risk insights, organizations can identify changes in their third parties' risk profiles immediately, improving their ability to mitigate emerging threats to their business resilience.

#7. Third-Party Security Incidents Reach the Tipping Point

The number of third-party cybersecurity incidents has grown exponentially in the last 3 years, from 21% of companies reporting a third-party incident in 2021 to more than 60% in 2024. The severity of third-party breaches has also increased, with millions of people impacted by the incident at Change Healthcare alone. With healthcare and financial services organizations already widely targeted in third-party attacks, expect cybercriminals to expand their efforts in 2025 by attacking third parties that support high-profile and sensitive industries such as educational intuitions, state governments, and manufacturers.

Next Steps

As we look ahead to 2025, third-party risk management is set to undergo significant evolution. The continual progression of AI, along with harmonizing regulations and a focus on resilience, will enhance the effectiveness and efficiency of TPRM programs. By embracing these innovations and trends, organizations can stay ahead in managing third-party risks effectively and adapt to the evolving landscape of business partnerships and regulatory requirements.

For more on how Prevalent can help you mature your TPRM program to tackle these and other challenges, request a demo today.