2024 Vendor Risk Landscape: What 10,000 Assessments Reveal

Methodology & Scope

Every year, VendorIQ's research division analyzes the full universe of vendor risk assessments conducted through our platform to produce the definitive picture of the third-party risk landscape. This report draws on data collected between January 1 and December 31, 2023, encompassing assessments across every major industry vertical and geography where our clients operate. Each assessment was scored using VendorIQ's standardized R3 methodology, which evaluates vendors across financial stability, cybersecurity posture, operational resilience, regulatory compliance, and ESG performance dimensions.

The dataset is the largest we have ever compiled, reflecting both organic platform growth and an unmistakable industry trend: organizations are assessing more vendors, more frequently, and with greater scrutiny than at any point in the past decade. The numbers speak for themselves.

Our methodology ensures consistency by normalizing scores across industries and geographies, accounting for sector-specific regulatory requirements and region-specific threat profiles. All findings presented here have been validated against external benchmarks from Gartner, the Ponemon Institute, and NIST frameworks to ensure accuracy and relevance.

The Big Picture: Risk is Rising

The headline finding of this year's report is unambiguous: vendor risk is increasing. The average composite risk score across all assessments rose 12% year over year, climbing from 58.3 in 2022 to 65.2 in 2023 on VendorIQ's 100-point scale, where higher scores indicate greater risk exposure. This is the third consecutive year of increases and the steepest single-year jump we have recorded.

Three macro-level drivers are converging to push risk scores upward across virtually every sector and geography.

Supply chain complexity is compounding. The average enterprise now relies on 3.7x more third-party vendors than it did five years ago. As organizations outsource more functions, from cloud infrastructure to payroll processing to customer support, the surface area for third-party risk expands proportionally. Our data shows that companies with more than 500 active vendors scored 18% higher on composite risk than those with fewer than 100, even when controlling for industry and size.

Regulatory expansion is accelerating. The proliferation of data protection laws, supply chain due diligence requirements, and sector-specific mandates has created a fragmented compliance landscape that few vendor management programs are equipped to navigate. DORA in the EU, the SEC's new cybersecurity disclosure rules in the United States, and Australia's Security of Critical Infrastructure Act are just three of the 27 major regulatory changes we tracked during the period. Vendors operating across multiple jurisdictions face an exponentially more complex compliance burden, and many are falling behind.

Cyber threats are evolving faster than defenses. The sophistication and frequency of attacks targeting supply chains reached unprecedented levels in 2023. The MOVEit, Okta, and 3CX incidents demonstrated how a single compromised vendor can cascade across thousands of downstream organizations. Our assessment data reflects this reality: cybersecurity-related risk factors drove more than half of the overall increase in composite scores.

Cybersecurity: The Dominant Risk Vector

For the second consecutive year, cybersecurity emerged as the single most significant risk vector in our dataset. The numbers paint a sobering picture of the current state of vendor security posture across industries. While organizations have made meaningful investments in their own security programs, the data suggests that those investments have not proportionally extended to third-party oversight.

More than two-thirds of vendors assessed through VendorIQ had at least one finding classified as critical on the cybersecurity dimension. The most common issues were outdated patch management practices (found in 52% of vendors), insufficient multi-factor authentication coverage (47%), and inadequate data encryption at rest (39%). These are not obscure technical failures; they represent fundamental hygiene gaps that adversaries routinely exploit.

Ransomware continued its meteoric rise as a threat to vendor ecosystems. We tracked a 23% increase in ransomware-related incidents affecting vendors in our dataset compared to the prior year. Perhaps more alarming, the average time to detect a vendor breach stood at 4.2 days, meaning that for nearly a business week, organizations remained unaware that a critical supplier had been compromised. That detection gap translates directly into exposure for every downstream customer.

The incident response plan gap is particularly troubling because it means that when breaches inevitably occur, there is no shared playbook for containment and communication. Organizations that cannot verify their vendors' incident response capabilities are effectively operating without a safety net for the most predictable category of third-party disruption.

Geographic Risk Distribution

Vendor risk is not distributed evenly across the globe. Regional regulatory environments, economic conditions, and threat landscapes all contribute to meaningful differences in average risk scores. Understanding these geographic patterns is essential for organizations with global vendor portfolios.

Region	Avg Risk Score	Top Risk Factor	YoY Change
North America	62.4	Cybersecurity	+9%
Europe	59.8	Regulatory Compliance	+14%
APAC	71.3	Operational Resilience	+11%
LATAM	74.6	Financial Stability	+16%

Europe saw the largest year-over-year increase (+14%) among established markets, driven almost entirely by the compliance burden of DORA implementation and the cascading effects of GDPR enforcement actions. European vendors scored relatively well on cybersecurity fundamentals but struggled with the pace of regulatory change across member states.

LATAM experienced the steepest increase overall at 16%, with financial stability emerging as the dominant risk factor. Currency volatility, inflation, and political uncertainty in key markets like Argentina and Brazil contributed to elevated financial risk scores for vendors headquartered in the region. Organizations sourcing from LATAM should prioritize financial health monitoring as part of their continuous assessment programs.

APAC's risk profile was shaped by operational resilience concerns, reflecting the region's exposure to both natural disaster risk and geopolitical tensions affecting supply chain continuity. The semiconductor supply chain, heavily concentrated in Taiwan and South Korea, remains a systemic risk factor that appeared in over 60% of technology-sector assessments involving APAC vendors.

Industry Spotlight

While risk is rising across the board, certain industries face disproportionate challenges based on their regulatory environments, data sensitivity, and supply chain structures.

Healthcare

Healthcare organizations reported the highest average risk scores of any sector at 73.8, driven by the combination of HIPAA compliance requirements, the sensitivity of protected health information, and the sector's historical underinvestment in vendor security oversight. The rapid adoption of telehealth platforms and connected medical devices during and after the pandemic dramatically expanded the vendor attack surface. A striking 78% of healthcare vendors assessed had at least one finding related to insufficient data handling controls, compared to 54% across all industries.

Financial Services

Financial institutions demonstrated the most mature vendor risk programs in our dataset, with the lowest average composite risk score among regulated industries at 57.2. However, this maturity comes with a caveat: financial services firms also assess the highest volume of vendors per organization (averaging 847 active vendor relationships), meaning that even a low per-vendor risk score translates to substantial aggregate exposure. Concentration risk, the over-reliance on a small number of critical vendors, was flagged in 62% of financial services assessments.

Technology

The technology sector occupies a unique position in the vendor risk landscape as both a major consumer and producer of third-party services. Technology companies scored a moderate 64.1 on average composite risk, but exhibited the widest variance of any sector. Large, established technology vendors typically scored well below the mean, while smaller SaaS providers and startups frequently lacked the governance frameworks and security controls that enterprise buyers increasingly require. The long tail of technology vendors, companies with fewer than 200 employees, accounted for 71% of critical cybersecurity findings in the sector.

Emerging Trends to Watch

Beyond the headline findings, our analysis identified three emerging trends that we expect to reshape the vendor risk landscape in the coming years. Organizations that begin addressing these trends now will be significantly better positioned than those that wait for regulatory mandates or market pressure to force their hand.

1. AI Vendor Risk

The explosion of generative AI adoption has introduced an entirely new category of vendor risk that most existing frameworks are not designed to address. In 2023, 34% of organizations in our dataset reported onboarding at least one AI or machine learning vendor for the first time. Yet only 12% of those organizations had AI-specific risk assessment criteria in their vendor evaluation processes. The gap is significant: AI vendors introduce unique risks related to data training practices, model bias, intellectual property exposure, and regulatory uncertainty that traditional vendor questionnaires simply do not capture. VendorIQ is actively developing AI-specific assessment modules to address this gap, and we recommend that all organizations begin building AI vendor governance frameworks immediately.

2. ESG Integration

Environmental, social, and governance factors are rapidly moving from "nice to have" to "must have" in vendor risk programs. Regulatory pressure from the EU Corporate Sustainability Due Diligence Directive, combined with investor and consumer expectations, is driving organizations to extend ESG scrutiny to their supply chains. Our data shows that 28% of assessments in 2023 included ESG criteria, up from just 11% in 2022. The challenge is standardization: there is currently no universally accepted framework for evaluating vendor ESG performance, leading to inconsistent scoring and difficulty in benchmarking across portfolios.

3. Concentration Risk

The growing dependence on a small number of hyperscale vendors, particularly in cloud computing, identity management, and payment processing, represents a systemic risk that individual vendor assessments cannot fully capture. When a single vendor serves as critical infrastructure for thousands of organizations, a disruption at that vendor becomes a market-wide event rather than an isolated incident.

We recommend that organizations adopt a portfolio-level view of vendor concentration, mapping dependencies not just at the individual vendor level but across shared infrastructure, geographic concentration, and fourth-party relationships. VendorIQ's Watchlists feature was designed specifically to provide this kind of systemic risk visibility.

Key Takeaways

The 2024 Vendor Risk Landscape Report makes clear that the trajectory of third-party risk is upward, and organizations that treat vendor risk management as a static, annual exercise will find themselves increasingly exposed. The shift to continuous, intelligence-driven vendor oversight is no longer aspirational; it is operational necessity. VendorIQ remains committed to providing the platform, data, and insights that make that shift achievable at scale.

For a deeper dive into any of the findings presented here, or to benchmark your own vendor portfolio against industry and geographic peers, contact the VendorIQ research team or explore the interactive dashboards available in the VendorIQ platform.