Product Code: 71509
The market for vendor risk management (VRM) is expected to grow at a CAGR of 14.7% during the forecast period (2020-2025). The increasing number of third-party vendors in large as well as in small and medium enterprises, rapidly changing regulations across different regions, and need to continuously monitor and analyze vendor performance are some of the factors responsible for growing need of vendor risk management.
- Many large businesses are discovering that their systems and processes related to VRM are not adequate from a purely business standpoint, and they might have to bear substantial damages due to poor vendor risk management framework. For instance, an average of 30,000 different parts is required to build a single vehicle, which increases the complex processes and supply chain coordination necessary to manufacture automobiles on a global scale. The supply chains, with countless third-party manufacturers and service providers, constitute a significant source of risk for manufacturers in a domino effect, which in turn, is expected to augment the need for vendor risk management.
- For instance, in January 2020, Toyota recalled nearly 2.9 million vehicles, including 2011-2019 Corolla, 2011-2013 Matrix, 2012-2018 Avalon, and 2013-2018 Avalon Hybrid for a defect impacting airbags and seat belts. Such types of incidents might take place due to poor quality assessment management.
- Moreover, various laws and agencies such as the Office of the Comptroller of the Currency (OCC), the Health Insurance Portability and Accountability Act (HIPAA), the Consumer Financial Protection Bureau (CFPB), the Foreign Corrupt Practices Act (FCPA), Dodd-Frank, the HITECH Act, and the Gramm-Leach-Bliley Act require enterprises to set up a robust VRM framework, driving the end-user to adopt these solutions.
- The spread of the Covid-19 pandemic has emphasized the need for solutions that would help organizations in efficiently managing supply chains, identifying critical suppliers, and omitting any risks which are expected to augment the growth of vendor risk management solutions across various industries. The increased adoption of cloud and the need of real-time analytics are expected to proliferate the market growth.
Key Market Trends
BFSI is Expected to Witness Significant Growth
- The Banking sector is, by the nature of its business, is a highly interconnected sector owing to rapidly growing third party integration, increasing connected devices, online banking, and need for faster transactions. Greater interconnectivity introduces higher cybersecurity risks, given that there are too many things to secure and monitor. The interconnected entities are likely connected to new entities, which could also be the source of cybersecurity risk.
- Third-party vendors can often pose some serious cybersecurity risks to outsourcing banks such as financial/reputational damage, regulatory problems, operational disruptions, etc. For instance, Australian P&N Bank recently sent its customers a notification letter about a data breach that put the personal and sensitive account information of customers at risk. The bank stated that the breach occurred through its customer relationship management (CRM) platform operated by a third-party hosting firm. The information exposed included name, address, contact details, e.g., email, phone number, customer number, age, account number, and account balance.
- According to a study conducted by Opus and Ponemon institute, organizations share confidential and sensitive information with approximately 583 third parties on average? that adds up to a lot of additional risks. And only 34% of organizations in the study reported keeping a comprehensive inventory of these third parties, while just 35% rated their TPRM program as highly effective.
- The need for vendor risk management for compliance management, vendor information management, financial control is rapidly increasing in the BFSI industry due to greater exposure and continuously changing regulations. For instance, the guidance provided by Office of the Comptroller of the Currency (OCC) in May 2020, addresses specific types of third parties such as cloud service providers, data aggregators, fintech companies, and subcontractors and how regulations to follow while conducting business with these providers.
North America is Expected to Hold Major Share
- The vendor risk management market in the region is proliferating owing to advanced technological developments in the field of AI, machine learning, cloud and IoT, growth of end-user industries such as BFSI, healthcare, and others, increasing levels of investments, and a growing emphasis on data security.
- In January 2019, various banks and financial firms in the United States suffered data leak due to a third-party vendor's fault; The data leak was caused due to misconfiguring a server where Ascension stored digital versions of paper financial documents. As a result, one could get access to a database with over 24 million credit reports containing sensitive customer information.
- In August 2019, 2019 Annual Default Review, Supply Chain Risk Edition released by Rapid Ratings International Inc., a provider of vendor risk management solution rated 284 United States industrial firms that defaulted or filed for bankruptcy between 2014 and 2018 showed that suppliers in poor financial health have a higher probability of poor performance and bankruptcy. Out of the 37 U.S. industrial firms that defaulted in 2018, 95% had a "High Risk" or "Very High Risk" FHR at the start of the year.
- Moreover, the region is home to many business giants who have supply chains spread on an international level such as Wallmart and Amazon among others. Thus the vendor risk management players have the opportunity to penetrate further in the region by offering advanced functionalities with the help of AI and machine learning.
The market for vendor risk management is moderately fragmented as few established players in the market have gained the majority of the market share and thus is highly competitive. The Hugh initial investment and capability to cope up with the rapidly changing technology has made it difficult for new vendors to enter the market.
- In February 2020, RSA a firm delivering Business-Driven Security solutions to help organizations manage digital risk announced that it will be providing RSA Archer SaaS (software as a service) for customers seeking to implement the RSA Archer Suite in the cloud. The RSA Archer Suite helps organizations at any stage in their risk management maturity journey to more effectively and efficiently manage risk.
- In August 2019, IBM announced the launch of a new blockchain-powered solution aimed at mitigating supply chain risk. Trust Your Supplier, the blockchain network enables businesses to more efficiently validate and onboard their vendors while maintaining a secure audit trail of buyer-supplier interactions down the supply chain.
Reasons to Purchase this report:
- The market estimate (ME) sheet in Excel format
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TABLE OF CONTENTS
- 1.1 Study Assumptions and Market Definition
- 1.2 Scope of the Study
2 RESEARCH METHODOLOGY
3 EXECUTIVE SUMMARY
4 MARKET DYNAMICS
- 4.1 Market Overview
- 4.2 Industry Attractiveness - Porter's Five Forces Analysis
- 4.2.1 Bargaining Power of Suppliers
- 4.2.2 Bargaining Power of Buyers
- 4.2.3 Threat of New Entrants
- 4.2.4 Threat of Substitutes
- 4.2.5 Intensity of Competitive Rivalry
- 4.3 Assessment of Impact of COVID-19 on Vendor Risk Management Market
- 4.4 Market Drivers
- 4.4.1 Need for the Efficient Management of Complex Vendor Ecosystems
- 4.4.2 View the Risk Levels Associated With Various Tasks
- 4.5 Market Restraints
- 4.5.1 Dependence on Non-Formal and Manual Processes By Many Organizations
- 4.6 Market Challenge
- 4.6.1 Solution Integration With Existing Applications
5 MARKET SEGMENTATION
- 5.1 By Type
- 5.1.1 Solutions (Qualitative Analysis for Sub-segments)
- 184.108.40.206 Vendor Information Management
- 220.127.116.11 Quality Assurance Management
- 18.104.22.168 Financial Control
- 22.214.171.124 Compliance Management
- 126.96.36.199 Audit Management
- 188.8.131.52 Contract Management and Others
- 5.1.2 Services
- 5.2 By Deployment Type
- 5.2.1 On-Premises
- 5.2.2 Cloud
- 5.3 By Organization Size
- 5.3.1 Small and Medium-Sized Enterprises
- 5.3.2 Large Enterprises
- 5.4 By Industry Vertical
- 5.4.1 Banking, Financial Services, and Insurance
- 5.4.2 Telecom and IT
- 5.4.3 Manufacturing
- 5.4.4 Government
- 5.4.5 Healthcare
- 5.4.6 Others (Energy and Utilities, Retail and Consumer Goods)
- 5.5 Geography
- 5.5.1 North America
- 5.5.2 Europe
- 5.5.3 Asia Pacific
- 5.5.4 Latin America
- 5.5.5 Middle East and Africa
6 COMPETITIVE LANDSCAPE
- 6.1 Company Profile*
- 6.1.1 RSA Security LLC
- 6.1.2 Genpact Limited
- 6.1.3 LockPath
- 6.1.4 MetricStream
- 6.1.5 IBM Corporation
- 6.1.6 Resolver Inc.
- 6.1.7 SAI Global
- 6.1.8 Rapid Ratings International Inc.
- 6.1.9 Quantivate
- 6.1.10 Optiv Security, Inc.
7 INVESTMENT ANALYSIS
8 FUTURE OF THE MARKET