Why Third-Party Vendor Risks Are Exploding—And How You Can Stay Protected

The Third-Party Risk Explosion

Remember when cybersecurity was mostly about protecting your own systems? Those days are long gone. Today, your organization is only as secure as its weakest vendor—and that should keep you up at night.

The numbers don’t lie: third-party breaches have increased by 17% year-over-year, with the average cost of a third-party data breach now exceeding $4.5 million. What’s driving this surge, and why has your vendor ecosystem become the new favorite target for cybercriminals?

Why Third-Party Risks Are Skyrocketing in 2025

1. The Digital Supply Chain Has Become Infinitely Complex

Today’s businesses rely on an average of 137 SaaS applications. Each represents a potential entry point for attackers. The modern organization doesn’t just have dozens of vendors—it has an interconnected web of suppliers, each with their own vendors (fourth parties) and beyond.

“It’s no longer about securing your perimeter,” explains cybersecurity expert Maria Chen. “The perimeter has dissolved. Your data flows through a complex ecosystem that extends far beyond your control.”

This complexity creates blind spots. In a recent survey, 67% of organizations admitted they couldn’t identify all the third parties with access to their sensitive data.

2. The Attack Surface Has Expanded Dramatically

The acceleration of digital transformation initiatives has created an explosion of new attack vectors:

• Cloud migration: Organizations rapidly shifting to cloud environments often lack visibility into how vendors secure their portions of shared responsibility models.
• Remote/hybrid work: The pandemic-accelerated shift to distributed workforces means third-party access points have multiplied exponentially.
• API ecosystems: Modern applications rely on dozens or hundreds of interconnected APIs—each representing a potential vulnerability if not properly secured and monitored.
• IoT integration: Connected devices throughout supply chains create vast new attack surfaces with often-rudimentary security controls.

3. AI and Automation Have Transformed the Threat Landscape

Both defenders and attackers are wielding increasingly sophisticated tools:

• AI-powered attacks: Machine learning now powers highly convincing phishing campaigns that can bypass traditional security awareness training.
• Automated vulnerability scanning: Attackers can efficiently identify weakness across vendor networks at unprecedented scale.
• Algorithm manipulation: Emerging threats include the ability to corrupt AI-based security systems through data poisoning and adversarial attacks.

According to a recent report, 63% of organizations experienced a third-party breach related to AI or machine learning integration in the past year.

4. Regulatory Pressure Is Mounting

The regulatory landscape has dramatically shifted toward third-party oversight:

• The EU’s Digital Operational Resilience Act (DORA) requires financial institutions to rigorously monitor all technology providers.
• SEC requirements now mandate disclosure of material cybersecurity incidents, including those originating from vendors.
• The FTC Safeguards Rule explicitly requires companies to oversee their vendors’ security practices.
• GDPR, CCPA, and emerging state privacy laws hold organizations accountable for data breaches, regardless of whether a third party was responsible.

Real-World Consequences: When Vendors Become Vulnerabilities

The fallout from third-party breaches can be devastating:

• The SolarWinds supply chain attack compromised over 18,000 organizations, including multiple government agencies.
• The CrowdStrike update incident in July 2024 caused worldwide system outages affecting critical services from airlines to healthcare providers.
• The MOVEit file transfer vulnerability led to data theft affecting over 2,000 organizations and hundreds of millions of individuals.

How to Protect Your Organization: Building a Resilient Vendor Risk Management Program

While third-party risks can’t be eliminated, they can be effectively managed. Here’s your roadmap for protection:

1. Implement Comprehensive Vendor Due Diligence

Before engaging with any third party:

• Conduct thorough security assessments using standardized frameworks (NIST, ISO 27001, etc.)
• Verify regulatory compliance relevant to your industry
• Review SOC 2 reports and penetration testing results
• Assess their own third-party risk management processes (fourth-party risk)

“Due diligence isn’t a one-time activity,” notes Jason Simmons, CISO at a major financial institution. “It should be a continuous process that evolves as both your relationship and the threat landscape change.”

2. Craft Strong Contractual Protections

Your vendor contracts should explicitly address:

• Security requirements and compliance obligations
• Right-to-audit clauses
• Breach notification timelines (far shorter than regulatory requirements)
• Data handling restrictions and privacy guarantees
• Incident response coordination procedures
• Liability and indemnification provisions

Remember that standard vendor agreements typically favor the vendor—push for security-focused amendments.

3. Deploy Continuous Scanning Solutions

Point-in-time assessments are no longer sufficient. You need real-time visibility into vendor security postures:

• Implement automated security rating services that continually assess external vendor security indicators such as WHYS Guardian
• Deploy data loss prevention (DLP) tools to monitor vendor access to sensitive information
• Establish vendor security performance dashboards for ongoing oversight
• Invest in threat intelligence feeds that provide early warning of vendor-specific vulnerabilities

We Help You Secure leverages WHYS Guardian a continuous scanning solution that provide real-time visibility into your vendors’ security postures, allowing you to identify shadow IT and address risks before they lead to breaches.

4. Segment Your Vendor Ecosystem by Risk

Not all vendors pose equal risk. Implement a tiered approach:

• Critical vendors: Those with access to crown jewel data or systems require the most rigorous oversight
• High-risk vendors: Organizations with access to sensitive data but not critical operations
• Medium-risk vendors: Limited access to sensitive data
• Low-risk vendors: No access to sensitive data or critical systems

This risk-based approach allows you to focus resources where they’ll have the greatest impact.

5. Prepare for Inevitable Incidents

Despite best efforts, vendor incidents will occur. Preparation is key:

• Develop vendor-specific incident response playbooks
• Conduct joint tabletop exercises with critical vendors
• Establish clear communication channels for security incidents
• Maintain separation of environments where possible to contain vendor-initiated breaches
• Document evidence collection procedures for potential legal action

The We Help You Secure Approach: Beyond Traditional Vendor Management

At We Help You Secure, we’ve pioneered advanced approaches to third-party risk management that go beyond traditional methods:

• AI-powered risk prediction: Our proprietary algorithms analyze vendor security patterns to identify potential security issues before they become breaches.
• Continuous attack surface monitoring: We constantly scan your external environments to detect new vulnerabilities, misconfigurations, and suspicious activities introduced by third party vendors.
• Fourth-party risk mapping: We help you visualize and understand the extended supply chain dependencies that affect your security posture.
• Automated vendor questionnaire validation: Our tools verify vendor security claims against observable security practices, highlighting discrepancies.
• Regulatory compliance automation: We streamline the process of ensuring vendors meet evolving regulatory requirements across jurisdictions.

Moving Forward: From Reactive to Proactive Third-Party Risk Management

The explosion in third-party risk isn’t slowing down. Organizations that thrive will be those that transform vendor risk management from a compliance checkbox to a strategic advantage.

“The organizations that succeed will be those that view vendor risk management not as a burden but as a competitive differentiator,” says Michael Rodriguez, Risk Management Director at a global retailer. “When you can confidently partner with innovative vendors while managing risk, you accelerate your business while keeping it secure.”

Ready to transform your approach to third-party risk? Contact our team to learn how We Help You Secure can help you build a resilient vendor risk management program that protects your organization without slowing innovation.

For more insights on emerging cybersecurity threats, check out our recent whitepapers on ransomware protection and zero-trust architecture.