Third-party risk management (TPRM) is foundational to any modern compliance framework. No meaningful compliance or security program exists without strong TPRM at its core. A recent report found that a staggering 30% of breaches were linked to third-party involvement.1 Despite this exposure, most organizations continue to rely on TPRM programs that were never designed to prevent breaches; they were designed to document compliance. Traditional approaches, annual questionnaires, point-in-time audits, and checkbox attestations create the appearance of due diligence while leaving organizations blind to how vendor risk evolves between review cycles.
The result is a program that generates paperwork, not protection. For ISACA® professionals, it is important to remember that the tools that have been standardized across the cyberindustry are evidence of a process, not confidence in a decision. The question for professionals is whether TPRM, as it is commonly practiced, is a robust risk management function or simply a risk documentation function. Rethinking that distinction, particularly around how professionals use questionnaires and what assurance these questionnaires actually provide, is overdue.2
Why Is Traditional TPRM Failing With Generic Questionnaires?
There are several reasons why traditional TPRM falls short for many organizations, including:
- Vendor categorization that does not scale—Categorizing vendor risk using the high, medium, and low framework does not work across every organization. Risk is not determined by the vendor’s brand, size, or industry. It is determined by how that vendor interacts with an enterprise’s data, systems, identities, and business processes. A vendor can be categorized as low risk in one environment and mission-critical in another. As an example, a marketing analytics tool storing anonymized data is very different from the same platform that houses regulated personally identifiable information (PII) and feeds executive reporting.
- Broad security questionnaires—Standard questionnaires (i.e., Standardized Information Gathering [SIG], Consensus Assessments Initiative Questionnaire [CAIQ], custom 200–1000 question sheets) are designed to assess a vendor’s general security posture, not the specific risk created by how that vendor is used inside of the organization. They are broad and framework-aligned, control-focused, and designed for comparability across vendors. However, they clearly rely on generic yes or no questions that prioritize compliance checkboxes over tailored risk analysis. This leads to incomplete visibility into dynamic threats.
- Vendor environment volatility—Many TPRM programs assume relative stability in vendor environments. However, that assumption is becoming increasingly invalid. Modern vendors, particularly cloud-native and software as a service (SaaS) providers, operate in highly dynamic ecosystems. In these environments, infrastructure is elastic and new features are deployed continuously. Downstream vendors can change; Data flows evolve, and risk exposure shifts in weeks, not years.
3 dynamics drive this volatility:
- Expanding use cases without reassessment—Vendors are often approved for a defined use case. Over time, organizations may expand integrations, enable additional modules, or process more sensitive data without a formal reassessment.
- Downstream vendors and data path changes—Several shifts can happen within organizations that can disrupt stable TPRM: Downstream vendors can be added or modified, data storage relocated, or cloud infrastructure altered. Each change may affect data residency, regulatory exposure, and concentration risk. However, many TPRM programs evaluate downstream vendors only during onboarding or annual reviews.
- Continuous deployment and control drift—SaaS vendors deploy new features regularly. While certifications can provide assurance over control design, they do not guarantee that newly introduced capabilities align with the customer's original risk assumptions.
- Operational burnout—Operational burnout can be caused by several interconnected issues. For instance, imagine an organization that introduces several new third-party partners. The organization’s TPRM professionals are overwhelmed by the large number of new vendors, approaching a threshold where they cannot process them in a timely manner. With new AI vendors popping up every day, this TPRM overwhelm has the potential to scale dramatically.
- Lack of contextual scores—Traditional security scoring commonly only validates the external security posture but contains no context about an organization’s internal security posture. When an organization needs to hire a vendor for a specific project, they will accept the vendor after assessing the associated risk. While the risk of accepting a vendor is manageable, the real problem arises when vendors are accepted without understanding the potential risk involved.
Defining Contextual Assurance
Contextual assurance is the practice of evaluating third-party risk not in isolation, but relative to how a vendor is actually used within the organization. It moves beyond static scores and standardized control checklists to produce risk intelligence that is specific, explainable, and tied to real business exposure. Where traditional TPRM asks "is this vendor secure?," contextual assurance asks the more operationally relevant question: what does this vendor's risk mean for the organization, given what has been entrusted to them? There are several ways to answer this questions when evaluating third-party risk:
Risk Relative to Business Use Case
Not all third parties introduce the same level of risk. Each third party will have a very different use case. A vendor used solely for anonymized marketing insights presents a fundamentally different risk profile than a platform ingesting protected health information (PHI) from patient health records. The tools look the same on paper, but risk that is relative to the business use case requires extensive, in-depth research on how risk is estimated and defined.
Risk is not inherent to the vendor alone. It is inherent to how the organization uses the vendor. Third parties often process regulated data (e.g., PHI, Payment Card Industry [PCI], PII), have privileged system access, integrate deeply into production environments, influence customer-facing services, and act as a downstream vendor to other critical vendors, which are all factors that materially elevate exposure.
Defensible Scores
Contextual assurance requires more than a number—it requires a defensible score. A risk score must clearly convey the vendor’s specific business use case, the evidence evaluated (controls, access, data sensitivity, architecture), and the logic and weighting behind the calculation. When grounded in context and evidence, risk scores become decision tools. They help organizations align vendor approvals, monitoring, and mitigation strategies with their defined risk appetite and the real impact of the product or service. Contextual assurance requires explanation, traceability to evidence, and is tied to business context.
Vendor Dependency and Blast Radius
Third-party risk management must move beyond surface-level assessments and provide real-time clarity into dependency mapping and impact exposure. The blast radius of a vendor incident should not require weeks of investigation; it should be immediately accessible. Without this visibility, business continuity planning is incomplete.
When a critical vendor fails, whether due to a breach, outage, or operational disruption, the downstream impact can be immediate and severe. An organization should be able to answer several critical questions:
- How does the vendor support a certain business function?
- What data, systems, and processes depend on that specific vendor?
- What are the operational and regulatory impacts of vendor failure, and what is the potential blast radius of a security or availability incident?
Resilience requires knowing not just who the vendors are, but also how their failure affects the enterprise.
Downstream Vendors and Supply Chain Exposure
Downstream vendors are just as critical as primary vendors. Third parties rely on their own vendors, creating fourth- and fifth-party dependencies that extend the risk surface far beyond vendor service contracts.
True contextual assurance requires visibility not only into third parties, but also into the broader chain of downstream vendors that support them. Understanding these layered dependencies is essential to accurately assess risk, anticipate blast radius, and strengthen resilience across the entire supply chain. Figure 1 illustrates this shift by comparing traditional TPRM practices with a contextual assurance–driven approach.
Figure 1—Traditional Versus Contextual TPRM
| Traditional TPRM | Contextual TPRM |
|---|---|
|
Static questionnaire |
Dynamic risk profiling |
|
Annual review |
Continuous monitoring and reassessment |
|
Generic risk score |
Explainable contextual risk |
|
Manual document collection |
Automated evidence correlation |
|
Vendor-level only |
Vendor and downstream vendors |
Practical Implementations
There are several meaningful steps that professionals can take to ensure robust TPRM in their organizations, such as:
- Update analysis techniques—Shift from checklist-driven reviews to context-driven risk analysis tied to real business exposure.
- Integrate with enterprise risk—Align third-party risk insights with enterprise risk frameworks to reflect vendor exposure in the overall risk posture and board reporting.
- Implement a contextual risk model—Adopt a model that weighs risk based on data sensitivity, access level, operational dependency, and regulatory impact.
- Enhance reporting—Provide evidence-backed, explainable risk scores that clearly communicate impact, assumptions, and business relevance.
- Provide continuous assurance—Move from point-in-time assessments to ongoing monitoring that reflects real-time changes in vendor environments.
- Assess materiality based on use case—Assess and prioritize vendors based on how materially they impact business operations, not just their size or certifications.
- Move beyond fatigue toward assurance—Replace repetitive questionnaires with contextual, data-driven insights that reduce operational burden while increasing clarity and confidence.
Together, these implementations enable risk professionals to move from reactive, checklist-driven processes to proactive, context-aware risk management, improving decision making, reducing operational burden, and strengthening organizational resilience against evolving third-party risk.
Understanding AI in TPRM
With recent innovations in artificial intelligence (AI) agents, collecting and managing context is becoming possible through automation, where manual human processes can be significantly reduced or even fully automated. AI fits into the TPRM process by allowing professionals to focus on judgment and decision making instead of manual groundwork. Tasks, such as extracting data from vendor security documents (e.g., SOC 2 reports and policies), mapping controls to frameworks, reviewing security questionnaires, tracking changes in vendor environments, monitoring external risk signals, and identifying downstream vendor dependencies can now all be automated. As a result, automation may allow professionals to focus on judgment calls and bigger implementation decisions, while maintaining a human-in-the-loop approach to AI tools, making sure to review, validate, and approve final risk decisions.
Conclusion
Traditional TPRM was built for stability, but modern ecosystems are rapidly changing. Static assessments and generic scores can no longer capture dynamic vendor risk or supply chain exposure.
The future of TPRM requires contextual, evidence-backed risk models that provide clear visibility into vendor dependencies, blast radius, and material business impact. By moving from questionnaire fatigue to contextual assurance supported by continuous monitoring and AI-enabled analysis, organizations can strengthen resilience, improve decision making, and align third-party risk with real business exposure.
Endnotes
1 Verizon, 2025 Data Breach Investigations Report: Small- and Medium-Sized Business Snapshot
2 Gellert, G.A.; Borgasano, D.; et al.; “Third-Party Access Cybersecurity Threats and Precautions: A Survey of Healthcare Delivery Organizations,” Applied Clinical Informatics, vol. 16, iss. 5, 2025, p. 1518–1530
Gaudam Suriyakala Thiyagarajan
Is the cofounder and chief technology officer (CTO) of SecureOS; building an AI-native platform for enterprise third-party risk management (TPRM) and governance, risk, and compliance (GRC) workflows, with a focus on chief information security officer (CISO) and third-party risk management (TPRM) use cases, compliance automation, and agent-driven risk operations. Prior experience includes engineering and platform leadership across EMA, Koo, and Birla Pivot.
Nivathan Athiganoor Somasundharam
Is the cofounder and CEO of SecureOS, an AI-native platform focused on transforming third-party risk management (TPRM) and governance, risk, and compliance (GRC) through contextual vendor intelligence and continuous assurance. SecureOS helps organizations move beyond questionnaire-driven compliance toward real-time, defensible risk insights. Previously, he served at Gravitational (Teleport), advising enterprises on zero trust architecture, identity security, and cloud infrastructure access across Amazon Web Service (AWS), Google Cloud, and Azure environments. An active contributor to the cybersecurity community, he speaks and writes on zero trust, AI-driven GRC, and identity-centric security in modern cloud ecosystems.