Stop playing catch-up: rethinking vendor risk management in the age of AI and automation

Today’s organizations rely on an extensive network of third-party vendors, partners, and service providers to enhance operations and fuel innovation. Whether leveraging cloud services, supply chain partners, or outsourced IT solutions, these external dependencies introduce complex cybersecurity risks.

The 2024 Change Healthcare cyberattack exemplified the devastating consequences of a third-party vulnerability, exposing the personal and medical information of nearly 190 million individuals—the largest healthcare data breach on record. This incident underscored how deeply vulnerabilities in a single third-party provider can ripple across entire industries, exponentially expanding attack surfaces and amplifying the consequences of a single security failure.

The escalating threat of third-party cyber risks

One year after the Change Healthcare cyberattack, third-party breaches continue to dominate headlines, with new incidents emerging almost monthly. In January, government IT contractor Conduent suffered a cyberattack due to a third-party system compromise on an operating system. The following month, Grubhub disclosed a data breach after detecting unusual network activity linked to a compromised third-party service provider. These incidents are not isolated; they reflect a growing trend where cybercriminals exploit a single point of entry to infiltrate one or more organizations' entire digital supply chain.

The repercussions of a third-party cyberattack extend far beyond immediate operational disruptions. They erode customer trust, trigger scrutiny from officials, and result in significant financial losses. The evolving threat landscape coupled with businesses expanding their reliance on external vendors increases the potential for third-party security failures, making it imperative for organizations to rethink their approach to vendor risk management. Third-party risk management (TPRM) is no longer a compliance exercise, it is a business-critical function requiring continuous oversight and modernization.

The shortcomings of traditional TPRM approaches

Historically, organizations have relied on manual assessments to evaluate third-party risks, often involving lengthy security questionnaires, periodic audits, and contractual agreements outlining cybersecurity expectations. While these measures establish a baseline for vendor security, they are largely static and offer little real-time insight into evolving threats. As cybercriminals become more sophisticated and exploit new vulnerabilities within days of being discovered, a point-in-time assessment is no longer sufficient.

The increasing volume of vendor relationships further complicates manual risk management. Security teams are often overwhelmed by the sheer number of third parties they must monitor, leading to inefficiencies, delays, and gaps in visibility. Traditional approaches rely on periodic assessments that provide only a snapshot, leaving organizations blind to threats that can emerge between evaluations.

Without continuous oversight, security gaps can go undetected until it’s too late. Addressing these shortcomings requires a shift from manual, reactive processes to automation-powered security operations, where real-time monitoring and AI-driven analytics provide the agility needed to stay ahead of evolving threats.

How AI and automation-driven security is transforming TPRM

AI and automation should not replace human decision-making; but rather augment it, empowering security teams with the tools and information needed to make better, faster, and more informed choices. A well-implemented AI and automation-powered strategy reduces operational fatigue, optimizes resource allocation, and ensures organizations stay ahead of evolving cyber threats rather than constantly playing catch-up. By automating TPRM, organizations can shift from passive risk management to proactive threat prevention.

Unlike traditional risk assessments that provide a static view of a vendor’s security posture, automation and AI can continuously monitor third-party networks, applications, and behaviors to identify anomalies and provide real-time visibility of external threat environments. AI-based third-party risk detection can also help organizations progress beyond known, rule-based security risk detection to a more heuristic detection capability.

While the risk of AI hallucinations and associated false positives can still be an issue, this is an emerging field for detecting software and network vulnerabilities that should not be overlooked. This proactive approach helps organizations move away from reactive security models, allowing them to address risks before they become crises.

Automation further strengthens incident response. When a security event occurs within a third-party environment, automation platforms accelerate containment by instantly analyzing the breach, assessing its impact, and triggering efficient notification of the appropriate practitioners which can be used to engage response protocols quickly and accurately. This rapid intervention significantly reduces dwell time, limiting the potential damage caused by an attack.

An automation platform with robust case management capabilities and highly customizable playbooks provides a centralized location for storing valuable information about TPRM-associated tasks, detections, software in use in the organization, asset criticality, and more. This helps not only in the defense of an environment but also can be leveraged for compliance audit readiness or demonstrating to insurers and stakeholders what measures have been taken to manage third-party risk.

The time for action Is now

Third-party data breaches, such as the recent GrubHub cyberattack, act as a wake-up call for organizations to prioritize proactive security measures. Cybercriminals will continue targeting external providers as a backdoor into organizations, reinforcing the need for a proactive, AI-enhanced approach to TPRM.

By integrating AI and automation-driven security operations, organizations can achieve real-time monitoring, automated threat detection, and rapid incident response, detecting anomalies before they escalate into full-scale breaches. In an era where cyberattacks are inevitable, resilience is built on preparedness. The time for action is now before your organization becomes the next headline.

We've featured the best business VPN.

This article was produced as part of TechRadarPro's Expert Insights channel where we feature the best and brightest minds in the technology industry today. The views expressed here are those of the author and are not necessarily those of TechRadarPro or Future plc. If you are interested in contributing find out more here: https://www.techradar.com/news/submit-your-story-to-techradar-pro