How to Improve Third-Party Risk in ERM with Smart Tech
Continuous third-party risk monitoring uses technology to detect vendor issues in real time, helping organizations avoid data breaches, regulatory fines, and reputational damage.
Imagine discovering that your organization’s systems have been breached. It turns out a key vendor failed basic security tests, and sensitive data is exposed. Regulators demand answers. Fines soar into the millions. Your reputation takes a hit. In 2025, this scenario is frighteningly common. Compliance professionals must expand ERM to cover every link in the vendor chain.
Why Third-Party Risk Demands Attention
- 60% of data breaches in 2024 involved third-party vendors, according to the Ponemon Institute
- The average breach now costs $4.35 million, per IBM’s 2024 Cost of a Data Breach Report
- Regulations such as GDPR, CCPA, and the US Data Privacy Act hold organisations liable for vendor failures
- Vendor ecosystems often involve hundreds of suppliers, creating hidden risk pockets
- Unchecked third-party risk can lead to regulatory fines exceeding $50 million and lasting damage to customer trust
Third-party risk is no longer a peripheral concern. It has become a central compliance challenge as supply chains grow more complex and interconnected.
Annual Vendor Reviews Are Not Enough
Most organisations still rely on annual questionnaires or audits. These snapshots quickly become outdated. Financial troubles, cyber vulnerabilities, or regulatory changes can appear at any time. Between reviews, firms remain vulnerable. Fragmented data across compliance, procurement, and IT slows detection and response times.
Common pitfalls include:
- Data silos prevent comprehensive risk visibility
- Reactive approaches delay mitigation efforts
- Lack of continuous monitoring means emerging threats go unnoticed
In today’s fast-moving regulatory landscape, static assessments simply do not cut it.
How Technology Empowers Continuous Monitoring
Data Aggregation
Advanced ERM platforms integrate external data sources. These sources include sanctions lists, credit scores, and threat intelligence. This is done alongside internal vendor data.
AI-Driven Analysis
Machine learning identifies subtle risk trends and raises alerts in real time.
Automated Workflows
When risk thresholds are exceeded, systems can automatically pause vendor onboarding, trigger investigations, or alert stakeholders.
A 2024 Accenture study found organisations using AI-powered continuous vendor monitoring reduce compliance remediation costs by 40%.
“Vendor risk is enterprise risk. Every supplier failure impacts compliance, operations, and reputation.”
— Heather Mahalik, Senior VP of Global Compliance at Thomson Reuters
The Financial Impact of Neglecting Vendor Risk
| Increase in fines for vendor non-compliance | +35% | +38% | Deloitte 2025 Report |
| Customer churn due to trust loss | +25% | +27% | Gartner Survey 2025 |
| Reduction in incident rates with monitoring | — | –30% | Accenture Research |
Ignoring third-party risk leads to direct regulatory penalties. It also causes long-term damage such as lost customers and reputational harm.
Five Immediate Actions for Compliance Teams
- Adopt Continuous Monitoring
Move from annual audits to real-time risk feeds. - Integrate Systems
Connect compliance, procurement, and IT data for full visibility. - Quantify Vendor Risk
Use financial impact scoring to prioritise high-risk suppliers. - Automate Responses
Set alerts and hold onboarding when risks are detected. - Run Regular Drills
Conduct quarterly breach simulations involving key vendors.
These practical steps help organisations move from reactive to proactive ERM.
What Compliance Must Keep in Mind
ERM today means constant vigilance across your vendor ecosystem. Technology adoption, cross-department collaboration, and responsive processes are essential. This approach limits costly breaches, regulatory fines, and reputation damage.
In a 2025 Forrester survey, 78% of compliance leaders said continuous third-party risk monitoring was “critical.” It was vital to their risk management strategy.
Agile ERM is no longer optional. Compliance professionals who act now protect their organisations and gain a competitive edge. Start with one new risk data feed this quarter. Your company’s resilience depends on it.
