TPRM State of the Industry: The 2026 Risk Reality Check

As 2025 winds down, one thing is clear: risk has become borderless.  Third party risk, supply chain risk, cyber risk, and compliance risk no longer live in separate silos, they're converging into a single, fast-moving current that touches every part of the enterprise. 

For third party risk management (TPRM), supply chain risk management (SCRM), cyber, procurement, privacy, finance, and compliance teams alike, 2025 delivered a mix of wake-up calls and opportunities. As we head into 2026, the “state of the industry” is best summed up as: interconnected, complex and constantly tested. 

The Expanding Webs of Dependency 

Organizations rely on more third parties than ever before, often hundreds or thousands. But those third parties, in turn, rely on their own network of sub-vendors and service providers. The result? A risk ecosystem that’s far deeper than most teams can see. 

In a blog from Supply Wisdom, one of their “Top 10 Predictions for TPRM in 2025” was the rise of Nth party accountability (e.g., risk of sub-vendors & deeper tiers) becoming a business/regulatory priority. They further noted that organizations are shifting from static third party risk assessments to real-time/continuous monitoring of third parties and their locations.  

According to AuditBoard’s TPRM Trends for 2025 report, “growing dependency on third parties – intensified by AI adoption – has expanded not only the number of vendors but the array of related risks.” 

In other words, we’re not just managing third party risk anymore, we are managing ecosystem risk. And that ecosystem often extends three, four, even five tiers deep. 

Implication for 2026: TPRM and procurement must move beyond static third party lists for true supply chain visibility. Continuous monitoring and Nth-party mapping are no longer “nice to haves,” they are the new foundation of resilience. 

Supply-Chain Risk is the New Normal 

“Supply chain disruptions are no longer rare – they’re the new normal,” warned Willis Towers Watson in its Global Supply Chain Risk Report 2025. 

From geopolitical tensions and shipping disruptions to raw-material shortages and climate events, 2025 reminded us that a supplier’s risk is our own. 

The Organization for Economic Co-Operation & Development (OECD) recently cautioned that aggressive reshoring efforts, while intended to strengthen supply chains, could reduce global trade and GDP by up to 12% in some regions. That means even “localization” has global consequences. 

What this means for SCRM & TPRM teams: 

• Collaboration between supply chain and cyber risk teams is essential. 

• Third Party onboarding should include resilience indicators such as alternate sourcing, regional exposure, and operational continuity. 

• Organizations should scenario-test by performing table-top exercises: What happens if a key supplier is hit by a regional conflict or climate event? 

The Cyber Visibility Gap 

While awareness of supply-chain cyber risk surged in 2025, action is still lagging.

SecurityScorecard’s 2025 Supply Chain Cybersecurity Trends report found that 88% of organizations are concerned about supply-chain cyber risk, yet 79% say less than half of their Nth party suppliers are covered by a cybersecurity program. 

That gap is where incidents happen. 

And they did.  Several 2025, cyber events, ransomware attacks targeting software providers and managed-service platforms, illustrated how one vendor breach can ripple across thousands of customers. 

For CISOs and cyber teams, the perimeter now extends far beyond internal networks. For privacy, finance and compliance leaders, supply chain breaches mean real financial, legal, and reputational consequences. 

Takeaway: The old model of annual third party assessments can’t keep up. Continuous cyber monitoring and contractual visibility into sub-vendors must become the norm. 

The AI Shift: Power, Promise & Peril 

Artificial intelligence is rewriting the risk landscape, and not always in predictable ways. 

IBM’s Cybersecurity Predictions for 2025 identified “shadow AI” (unsanctioned generative-AI use) as a growing enterprise threat. At the same time, AI-powered tools are transforming due diligence, anomaly detection, and vendor monitoring. 

In June 2025, the Reserve Bank of India issued a warning about “systemic threat from vendor lock-ins" and called for AI-aware defense and zero-trust frameworks across financial institutions. 

According to Venminder’s State of Third-Party Risk Management 2025 survey, nearly 49% of organizations experienced some type of third party cyber incident in the past 12 months. And in that same report, 40% of those organizations have added third party contract language addressing AI risk (reflecting rising concern over third party-AI use). 

The lesson: AI is both a risk accelerator and a resilience enabler. 

For 2026:  

• Third Party due diligence must now include assessment of AI use, data inputs, and governance controls. 

• Model Risk Managers, Procurement, Legal and Compliance should align with TPRM to ensure contract language addresses AI transparency and model risk. 

• Cyber and privacy teams must evaluate third party identity controls and data-handling practices in AI workflows. 

Macro Risk and the Global Context 

Beyond technology, 2025 underscored how geopolitics, economics, and the environment intersect with third party risk. 

The World Economic Forum Global Risks Report 2025 lists conflict, trade wars, and technological polarization among the top medium-term global threats. 

Meanwhile, inflation and interest-rate volatility continue to squeeze third party liquidity, and climate-related disasters disrupt logistical and critical materials. 

For TPRM, SCRM, finance, and compliance leaders, the message is simple but sobering: your third party ecosystem doesn’t exist in isolation. It is exposed to the same global shocks as you are, and often more so. 

Action Steps: Build macro-risk stress-testing into your TPRM program by asking yourself:  

• “If a key supplier were sanctioned tomorrow, how would we respond?”   

• “If extreme weather wiped out a regional facility, what is our back up plan?” 

Organizational Readiness and the Integration Imperative 

Even as risk complexity rises, many TPRM programs remain under-resourced and siloed. The SecurityScorecard study found that most organizations “feel confident” in their third party cyber risk management, yet lack visibility into even half their vendors. 

Confidence without integration is dangerous. 

The best performing organizations in 2025, shared one trait: cross-functional collaboration. Cyber teams partnered with Procurement. Compliance sat at the same table as Finance. Business leaders viewed third party risk as enterprise risk. 

For 2026, Ask Yourself: 

• Does our third party risk management lifecycle link directly to risk and compliance processes? 

• Are our contracts AI-aware and data protection aligned? 

• Do we have joint playbooks for responding to third party incidents? 

• Are we continuously monitoring, not just assessing , our third party ecosystem? 

Looking Ahead: 2026 & Beyond 

As we enter 2026, expect five defining shifts in third party and supply-chain risk: 

1. Nth Party Visibility will move from buzzword to business requirements. 

2. Real time monitoring will replace static due diligence. 

3. AI governance will become a standard third party risk criterion. 

4. Supply chain resilience will merge cyber, operational, and ESG risk views. 

5. Regulatory scrutiny will tighten, especially around data privacy, AI, and supply chain transparency.  

In short, resilience is the new ROI (return on investment). 

Every organization’s competitive edge will hinge on how well it manages its interconnected risk ecosystem. 

Quick Check: Your 2026 Third Party Risk Readiness: 

• Do you know your third party sub-vendors? 

• Do your contracts address AI, identity, and data governance? 

• Can you monitor third party cyber posture continuously? 

• Are cyber, procurement, compliance, and finance aligned on third party lifecycle management? 

• Are teams all rowing in the same direction, or do you have prideful teammates rowing against reality on a power trip. 

• Have you stress-tested your supply chain for geopolitical or climate shocks? 

If not, now is the time to act. 2026 will reward the prepared. 

Third Party Risk Management (TPRM) is not a compliance exercise, it's a leadership function (and always has been).  As the lines blur between supply chain, cyber, and enterprise risk, the organizations that thrive will be those that break down silos and collaborate across disciplines. 

The state of the industry isn’t just about where we are, it’s about how we choose to respond. 

Let’s all choose to lead. 

TPRA’s Call To Action: 

At the Third Party Risk Association, we believe progress happens when professionals connect, share and lead together.  Join thousands of your peers across industries who are shaping the future of TPRM through collaboration, education, and thought leadership.  You can get involved through membership, join a working group, volunteer, partner as a vendor member or strategic partner to help strength the global TPRM community.  Also, join us at our highly-anticipated in-person conference April 20 – 23, 2026 in Denver, CO.

Author Bio

Physical Security, Safety, Business Recovery, Financial Crimes, Model Risk Management, and Enterprise Risk Management.  In her TPRM role she had oversight of over a thousand third party relationships, systems, due diligence reviews and contract management activities.  She developed, facilitated, and implemented training programs for thousands of employees over the years.

Heather is a natural born connector of people and values relationship building at the cornerstone of her career.  She encourages you to connect with TPRA and herself via LinkedIn to join in the "TPRM Global Conversation".