One of the most persistent challenges in Third-Party Risk Management (TPRM) is the growing tension between vendors and their customers over how much information is “enough” to complete the vendor due diligence process and gain meaningful assurance. At the heart of this tension is a fundamental friction: vendors are understandably cautious about sharing detailed internal information, while customers are under pressure to demand more of it. 

Vendor caution: Balancing security and disclosure 

For vendors, fear is real. Providing detailed documentation, such as audit reports, penetration test results, or internal security policies, feels like handing over the blueprint to their security house as part of the vendor due diligence process. There’s anxiety that this information could be misused, misinterpreted, weaponized in future business disputes, or maybe lost or breached by the customer. Many vendors worry about loss of control, leaks of sensitive competitive data, or being penalized for perceived gaps taken out of context. 

Customer expectations: Regulatory pressure and risk management 

On the other hand, customers feel the weight of regulatory expectations, board oversight, and real cyber risk. Their job is to protect their organization and to do that effectively, they want as much transparency as possible. Security questionnaires are long, evidence requests are deep, and certification reports are just the starting point. The result? A game of chicken where both parties end up frustrated, and risk assurance is delayed — or worse, superficial. 

This imbalance isn’t sustainable. 

Building a culture of trust: Bridging the gap  

TPRM will not improve unless both sides are willing to meet in the middle and work together. Creating a true partnership requires addressing the core challenges in third-party risk management directly and understanding the need for a balanced approach. Both vendors and customers must share the responsibility for the security and integrity of the information exchanged.  

This means rethinking how organizations define “enough” information for trust. Not everything must be disclosed in raw form. Vendors can offer redacted summaries, attestations from credible third parties, or scoped access under NDA. Customers, meanwhile, must move beyond checkbox audits and begin aligning questions with actual risk, focusing on what truly matters instead of what is easiest to ask.  

Not all controls are created equal. Only a small percentage actually protects against threats today. Customers should focus on those controls and not every control, which is a compliance exercise instead of a security practice. A deep dive into critical security areas, such as incident response protocols, vendor access controls, and data encryption standards, will have a much more meaningful impact than combing through irrelevant, blanket requirements. 

Standardization can also help. Frameworks like HITRUST offer a common language to reduce back-and-forth. By adopting a unified third-party risk management framework, vendors and customers can reduce complexity and avoid unnecessary friction. Frameworks and certifications like HITRUST set clear, actionable security standards that help organizations move beyond the guesswork of ad-hoc risk management practices.

But the real unlock is cultural: mutual respect, shared goals, and clear expectations. When vendors and customers collaborate — not compete — on risk transparency, both sides benefit. Trust is built faster, assurance is stronger, and business moves forward. 

Looking ahead: Embracing partnership for a secure future 

The future of TPRM isn’t more friction. It’s more partnership. As both sides work together to enhance transparency and security, TPRM will evolve into a more proactive and sustainable process.  

Third-party risk management (TPRM) in financial services has become increasingly critical as institutions rely more on external vendors and technology providers to enhance their operational efficiency and innovation capabilities. With the financial sector rapidly adopting new technologies, outsourcing key processes, and integrating complex vendor ecosystems, effective management of third-party risks has become essential. But how exactly is TPRM in finance evolving to address these growing challenges, and how can organizations proactively prepare for the future?

Why TPRM is a growing concern in finance

The expanding vendor ecosystem in financial services

The financial sector’s vendor landscape is rapidly expanding, driven by digital transformation, fintech integrations, and a growing dependency on cloud services. Financial institutions today engage with a broader range of third-party providers than ever before. Each new partnership introduces potential vulnerabilities, underscoring the critical importance of robust third-party risk management in finance.

The business impact of third-party risk failures

Third-party risk failures can lead to significant financial losses, regulatory penalties, and severe reputational damage. Incidents involving vendor breaches or compliance lapses have made headlines, highlighting how crucial effective third-party risk management in financial services is for safeguarding trust and maintaining operational stability. Companies must now consider third-party risks as integral to their strategic planning, with clear procedures and mitigation strategies to prevent and respond to such disruptions.

Regulatory pressures and industry standards

Key regulations shaping third-party risk management

Financial institutions face stringent regulatory requirements designed to enhance oversight and manage risks associated with third-party vendors. Key regulations such as OCC Bulletin 2013-29, FFIEC guidelines, and recent updates from regulatory bodies demand comprehensive vendor management programs. Compliance with these regulations is not merely about avoiding penalties but is integral to the institution’s overall risk management strategy, requiring proactive measures and thorough documentation of third-party activities.

The shift toward continuous compliance and oversight

Regulators increasingly emphasize continuous compliance, transitioning from periodic checks toward real-time monitoring and oversight of third-party engagements. This shift necessitates an agile and robust financial TPRM infrastructure capable of ongoing, real-time analysis, rapid response to anomalies, and timely remediation of any compliance issues that arise.

How regulatory expectations are evolving

Regulatory bodies are consistently pushing financial institutions toward enhanced transparency and accountability. The expectations now extend beyond basic compliance to detailed reporting, comprehensive documentation, and demonstrable oversight of vendor activities, particularly around cybersecurity and data protection. Financial institutions must adapt to these evolving expectations, ensuring their third-party risk management programs are robust, transparent, and continuously evolving.

Core strategies for managing third-party risk effectively

Vendor risk assessments and onboarding due diligence

Effective third-party risk management in finance begins with rigorous vendor risk assessments and comprehensive onboarding due diligence. Institutions must thoroughly evaluate potential vendors’ cybersecurity measures, regulatory compliance history, operational resilience, and financial stability. This proactive approach ensures that partnerships are initiated with full awareness of potential risks, enhancing overall security posture.

Ongoing monitoring and performance reviews

Continuous monitoring and regular performance evaluations of vendors are essential elements of successful TPRM in finance. Organizations must establish systematic processes to detect and mitigate risks promptly, ensuring vendor compliance remains consistently high. Regular reviews enable timely interventions, thereby safeguarding institutional operations and reputation.

Working proactively with vendors to improve security posture

Establishing clear expectations and communication channels

Transparent, consistent communication and clearly defined expectations between financial institutions and their vendors are fundamental to effective TPRM. Establishing communication channels and clear contractual terms helps ensure alignment on security practices, compliance responsibilities, and protocols for incident management, thereby significantly reducing the potential for misunderstandings and vulnerabilities.

Encouraging transparency through shared assessments and reporting

Transparency is a cornerstone of effective third-party risk management in financial services. Encouraging vendors to proactively share security assessments, incident reports, and remediation plans fosters an environment of trust and collaboration. This approach not only enhances the security posture of the organization but also expedites responses to potential threats and vulnerabilities.

The role of technology in scaling risk management

Automation tools for vendor tracking and audits

Automation technologies significantly enhance financial TPRM capabilities by streamlining vendor tracking, conducting comprehensive audits, and automating risk assessments. These tools reduce manual effort, minimize errors, and provide accurate, timely insights into vendor performance, enabling financial institutions to manage extensive and complex vendor networks efficiently.

AI-powered risk scoring and threat detection

AI is revolutionizing third-party risk management through advanced risk scoring, predictive analytics, and real-time threat detection. AI-driven systems quickly identify emerging threats and vulnerabilities, enabling proactive management and timely mitigation actions. Financial institutions leveraging AI benefit from enhanced predictive capabilities, reduced response times, and improved overall risk management effectiveness.

Conclusion: Preparing for what’s next in third-party risk

Why HITRUST is the way forward

The future of third-party risk management in financial services requires comprehensive, adaptive, and industry-trusted assurance programs. HITRUST offers structured assessments and continuous compliance monitoring, ensuring a resilient approach for financial organizations to manage vendor risks effectively.

The value of resilience and trust in vendor relationships

Building resilience and trust in vendor relationships is essential in a landscape marked by complexity and evolving threats. HITRUST certifications help financial institutions exceed regulatory expectations, ensuring long-term security and robust operational compliance.

To learn more about how HITRUST can streamline your organization’s vendor assessments and build lasting trust with stakeholders, visit our third-party risk management page.

Are you thinking about pursuing HITRUST certification but unsure of the value? You’re not alone. The biggest question for organizations considering HITRUST certification is: Is HITRUST worth it?

Many organizations face mounting compliance demands, complex security frameworks, and escalating expectations from customers and regulators. In that environment, certification decisions can feel like a cost center. But a new independent study by Enterprise Strategy Group (ESG) suggests otherwise — and the numbers may surprise you.

What is the ROI on HITRUST?

A new economic validation report from ESG reveals that HITRUST certification is not just a benchmark of security excellence, but also a powerful business enabler. ESG’s model demonstrates a 464% return on investment (ROI) on HITRUST for organizations adopting the certification.

Drawing on interviews with organizations that have HITRUST certifications and rigorous economic modeling, ESG analyzed the business impact and value of HITRUST certification across operational efficiency, risk management, and growth. The findings reveal a very different story from the traditional checkbox narrative.

“We’ve doubled our revenue since getting HITRUST certified,” one participant told ESG. Another called it “a critical enabler for expanding into regulated markets.”

Whether you’re actively evaluating HITRUST or trying to build the business case internally, this study gives you the independent validation and economic clarity to move forward with confidence while understanding the ROI on HITRUST.

Final thoughts: Is HITRUST worth it?

If you or anyone in your organization is wondering, “Is HITRUST worth it?” download the full ESG Economic Validation Report to explore the in-depth analysis and understand the value of HITRUST certification.

Get the full report to learn

• What’s driving measurable ROI from HITRUST certification?
• How are organizations using it to reduce risk and win new business?
• Why it's viewed as a strategic lever, not just a compliance requirement?

Download the report now.