Third-Party Risk Management (TPRM) involves identifying, assessing, and mitigating risks associated with external vendors, suppliers, and service providers. These risks may include cybersecurity vulnerabilities, regulatory compliance failures, financial threats, and reputational damage.

Third parties often have access to intellectual property, sensitive data, personally identifiable information (PII), protected health information (PHI), or critical systems. Therefore, businesses must continuously monitor these external partners to mitigate potential risks that could impact security, performance, or compliance.