[Blog](/blog) Show links Resources [Blog](/blog) [Breaches](/breaches) [eBooks, reports, & more](/resources) [Events](/events) [News](/news) [Third-Party Risk Management](/category/third-party-risk-management) Show links Categories [Attack Surface Management](/category/attack-surface-management) [Company News](/category/company-news) [Compliance and Regulations](/category/compliance-and-regulations) [Cybersecurity](/category/cybersecurity) [Data Breaches](/category/data-breaches) [DevOps](/category/devops) [Human Cyber Risk](/category/human-cyber-risk) [Risks and Vulnerabilities](/category/risks-and-vulnerabilities) [Third-Party Risk Management](/category/third-party-risk-management) [Vendor Risk Management](/category/vendor-risk-management) [What is a Third-Party Vendor?](/blog/third-party-vendor) Publish date December 1, 2025 {x} minute read # What is a Third-Party Vendor? [Get a demo](/contact-sales) [Free trial](/demo) [Download the PDF guide](/resources/complete-guide-to-third-party-risk-management) [Free trial](/demo) Written by [Abi Tyas Tunggal](/team/abi-tyas-tunggal) Writer and Senior Product Manager at UpGuard. Abi's work has influenced leaders across cybersecurity, technology, and financial services. Reviewed by [Phil Ross](/team/phil-ross) Chief Information Security Officer Phil is a Forrester Zero Trust Strategist leveraging decades of experience in enterprise cybersecurity architectures. Table of contents eBook A Complete Guide to Third-Party Risk Management Free resource ### A Complete Guide to Third-Party Risk Management Learn how to protect your business with an effective cybersecurity program. [Download now](/resources/complete-guide-to-third-party-risk-management) A third-party vendor is any entity that your organization does business with. This includes suppliers, manufacturers, service providers, business partners, affiliates, brokers, distributors, resellers and agents.  Vendors can be upstream (suppliers and vendors) and downstream (distributors and resellers), as well as non-contractual entities. Outsourcing to service providers provides strategic advantages such as cost savings and outside expertise but also introduces [third-party risk](https://www.upguard.com/blog/what-is-third-party-risk) and [fourth-party risk](https://www.upguard.com/blog/what-is-fourth-party-risk). It is no longer enough to solely focus on your internal cybersecurity. Due diligence and cybersecurity risk assessments must be used prior to onboarding new vendors.[ Information risk management](https://www.upguard.com/blog/information-risk-management) means looking beyond your organization's walls to third and fourth-party vendors who have access to your [sensitive data](https://www.upguard.com/blog/sensitive-data).  ## What Risks Do Third-Party Vendors Bring? Third-party vendors, partners, contractors and consultants can bring needed expertise and services to your organization, but can often have access to internal systems and sensitive data. This means they can steal company data, change system configurations or sabotage critical infrastructure. Even with no malicious intent, poor third-party vendor security represents a large security risk.  This is why governments around the world have introduced strict regulatory requirements that require a form of [vendor risk management](https://www.upguard.com/blog/vendor-risk-management) to ensure [sensitive data](https://www.upguard.com/blog/sensitive-data) and [personally identifiable information (PII)](https://www.upguard.com/blog/personally-identifiable-information-pii) is transferred, stored and processed in a way that protects [information security](https://www.upguard.com/blog/information-security). Financial institutions, e.g. [APRA CPS 234](/blog/apra-cps-234-information-security-prudential-standard), and healthcare organizations, e.g. HIPAA, come under particular regulatory scrutiny.  ## Do I Need to Worry About Vendors Who Don't Work on Critical Business Activities? Yes, third-parties who don't conduct critical business activities can still represent significant third-party [vendor risk](https://www.upguard.com/blog/vendor-risk-impact-of-data-leaks-by-your-third-party-vendors). In some cases, cleaners can represent a larger third-party risk than a typical [Software-as-a-Service (SaaS)](https://www.upguard.com/blog/saas-security-risks) provider.  This is because the cleaner may have access to the CEO's computer that stores information that could be the target of [corporate espionage](https://www.upguard.com/blog/corporate-espionage).  The role and size of the third-party is generally not  as important as the nature of the vendor relationship, the criticality of its activities, the level of access it has to [sensitive data](https://www.upguard.com/blog/sensitive-data) or property and your organization's accountability for its inappropriate actions. This is why a cleaner could introduce more [cybersecurity risk](https://www.upguard.com/blog/cybersecurity-risk) than an outsourced business function.  The key takeaway is to understand your organization's security standards are only as good as your weakest third-party vendor's security practices.  For example, the 2013 Target [data breach](https://www.upguard.com/blog/data-breach) began with a single store's[ HVAC provider](https://krebsonsecurity.com/2014/02/target-hackers-broke-in-via-hvac-company/) installing [malware](https://www.upguard.com/blog/malware).  Every vendor is a possible [attack vector](https://www.upguard.com/blog/attack-vector) that cyber criminals can use to launch [cyber attacks](https://www.upguard.com/blog/cyber-attack). ## What are Examples of Third-Parties?  Recall that a third-party vendor is anyone who provides a product or service to your organization including: * Manufacturers and suppliers (everything from PCBs to groceries) * Services providers, including cleaners, paper shredding, consultants and advisors * Short and long-term contractors. It's important you need to manage short and long-term contractors to the same standard and assess the information that they have access to. * Any external staff. It's important to understand that understanding of cyber risk can be widely different depending on the external staff. * Contracts of any length can pose a risk to your organization and the Internal Revenue Service (IRS) has regulations about vendor and third-party relationships that go beyond specific time frames so even the length of a contract can pose risk. In the IRS's eyes, a vendor working onsite with a company email address for longer than a specific period of time should be classified as employees and receive benefits. ## What is Vendor Risk Management? [Vendor risk management](https://www.upguard.com/blog/vendor-risk-management) (VRM) or third-party management deals with the management and monitoring of risks resulting from third-party vendors and suppliers.  VRM programs are concerned with ensuring third-party products, IT vendors and service providers do not damage business continuity, [data security](/blog/data-security) or expose sensitive information like credit card numbers or [personally identifiable information (PII)](https://www.upguard.com/blog/personally-identifiable-information-pii). The demand and need for vendor risk management has grown in recent years due to the introduction of laws like the EU [General Data Protection Regulation (GDPR)](https://www.upguard.com/blog/how-to-be-gdpr-compliant), as well as the fact organizations are entrusting more of their business processes to third-parties. Vendor security must be a key part of your overall [cybersecurity](/blog/cyber-security) strategy.  It's not enough to focus on service-level agreements (SLAs) and disaster recovery in your third-party risk management program. You need [real-time, ongoing monitoring](/product/vendorrisk) to be a part of your third-party vendor management program.  Your [information security policy](https://www.upguard.com/blog/information-security-policy) needs to focus on both first and third-party security to minimize total cyber risk. Spend some time creating a [third-party risk management framework](https://www.upguard.com/blog/third-party-risk-management-framework) and operationalizing it. Consider investing in [automating vendor risk management](https://www.upguard.com/blog/automate-vendor-risk-management).   ## Is My Business Liable For Third-Party Breaches? It depends on your industry.In the United States, the Office of the Comptroller of the Currency (OCC) wrote in its [risk management guidance](https://www.occ.gov/news-issuances/bulletins/2013/bulletin-2013-29.html): *A bank’s use of third parties does not diminish the responsibility of its board of directors and senior management to ensure that the activity is performed in a safe and sound manner and in compliance with applicable laws.* Along with the OCC, the Federal Reserve System (FRS) and the Federal Deposit Insurance Corporation (FDIC) have statutory authority to supervise third-party service providers in contractual agreements with regulated financial institutions.  Even if you aren't legally liable your customers expect you to protect their data and probably don't care that a [data breach](https://www.upguard.com/blog/data-breach) was the result of a third-party.  The [Supervision of Technology Service Providers booklet](https://ithandbook.ffiec.gov/it-booklets/supervision-of-technology-service-providers/introduction.aspx) from [the FFIEC](https://www.upguard.com/blog/third-party-risk-requirements-of-ffiec), highlights the use of third-party providers "*does not diminish the responsibility of the...board of directors and management to ensure that activities are conducted in a safe and sound manner and in compliance with applicable laws and regulations, just as if the institutions were to perform the activities in-house.*" ## What are Fourth-Party Vendors? A fourth-party vendor is a third-party vendor of your third-party vendor. In other words, it's a vendor who you don't have direct contact with but may still have an impact of your organization in the event of a [data breach](https://www.upguard.com/blog/data-breach) or [data leak](https://www.upguard.com/blog/data-leak).  You need to understand four things about your fourth-party vendors: 1. Who they are 2. What products and services they provide to your vendor 3. What level of due diligence your vendor has done on their vendors 4. Their [cybersecurity rating](https://www.upguard.com/blog/what-are-security-ratings)  This will allow your organization to better understand what risks may reside and how your [sensitive data](https://www.upguard.com/blog/sensitive-data) may be being shared or stored in a fourth-party vendor's system. A fourth-party [data breach](https://www.upguard.com/blog/data-breach) can be as impactful as a first or third-party breach, especially if they are storing your customers' [personally identifiable information (PII)](https://www.upguard.com/blog/personally-identifiable-information-pii). ## How Can I Get Information About My Fourth-Party Vendors? Ask your third-party vendors to provide you with: * Their [vendor management policy](https://www.upguard.com/blog/vendor-management-policy) * A complete list of vendors who are processing your [sensitive data](https://www.upguard.com/blog/sensitive-data) * Their most recent [cybersecurity risk assessment](https://www.upguard.com/blog/how-to-perform-a-cybersecurity-risk-assessment) of each of these vendors * The fourth party's [SOC 2](https://www.upguard.com/blog/soc-2) report Best in class organizations who want to minimize third-party risk and [fourth-party risk](https://www.upguard.com/blog/what-is-fourth-party-risk) are [continuously monitoring and scoring third-party and fourth-party vendors](https://www.upguard.com/product/vendorrisk) and sending security questionnaires over the lifecycle of the vendor relationship. Even former third-party vendors can create risk to your organization. For example, TigerSwan’s former recruiting vendor [left sensitive information publicly available](https://www.upguard.com/breaches/cloud-leak-tigerswan) in an S3 bucket until only recently. While the contract with the vendor was terminated in February 2017, thousands of resumes remained stored in the Amazon S3 subdomain “tigerswanresumes.” With [the cost of a data breach](https://www.upguard.com/blog/cost-of-data-breach) at its highest ever ($3.92 million) and breaches involving third-parties ballooning to $4.29 million, it pays to [prevent data breaches](https://www.upguard.com/blog/prevent-data-breaches). eBook A Complete Guide to Third-Party Risk Management Free resource ### A Complete Guide to Third-Party Risk Management Learn how to protect your business with an effective cybersecurity program. [Download now](/resources/complete-guide-to-third-party-risk-management) ## Related posts Learn more about the latest issues in cybersecurity. Third-Party Risk Management #### [The Evidence Is In: UpGuard Named a Leader in the IDC MarketScape for Worldwide Third-Party Risk Management](/blog/upguard-named-leader-in-idc-marketscape) UpGuard has been named a Leader in the IDC MarketScape: Worldwide Third-Party Risk Management Services 2026 Vendor Assessment. Find out why. [](/team/cassy-van-eeden) [Cassy van Eeden](#) October 26, 2026 Third-Party Risk Management #### [We Researched Four AI Evidence Analysis Tools for TPRM. Here’s What We Found.](/blog/ai-evidence-analysis-tools-for-tprm) We researched four AI evidence-parsing tools against four criteria that security teams often overlook. None nailed all four. [](/team/cassy-van-eeden) [Cassy van Eeden](#) September 29, 2026 Third-Party Risk Management #### [The Vendor Assurance Confidence Gap: Why It’s Widest With Your Most Critical Vendors](/blog/vendor-assurance-confidence-gap) Vendor assurance efforts are rising while confidence in them is falling. This gap is widest with the vendors that matter most. Here’s why. [](/team/cassy-van-eeden) [Cassy van Eeden](#) August 25, 2026 Third-Party Risk Management #### [Higher Education TPRM in 2026: New Research Maps the Vendor Visibility Gap](/blog/higher-education-tprm-2026) Explore UpGuard’s latest research into higher education third-party risk, including supplier concentration and systemic vendor exposure. [](/team/cassy-van-eeden) [Cassy van Eeden](#) August 10, 2026 Third-Party Risk Management #### [Ongoing TPRM Success: Continuous Security Monitoring with AI](/blog/continuous-security-monitoring-with-ai) Is manual work weighing down your security team and limiting your ability to scale? Learn how UpGuard and its AI features can help. [](/team/nicholas-sollitto) [Nicholas Sollitto](#) September 29, 2026 Third-Party Risk Management #### [Report Writing Solved: Generating Actionable Assessment Reports](/blog/report-writing-solved) Is manual report writing slowing down your security team? Learn how UpGuard’s AI can help. [](/team/nicholas-sollitto) [Nicholas Sollitto](#) April 2, 2025 [All posts](/blog) Experience superior visibility and a simpler approach to cyber risk management [Get a demo](/contact-sales) [Free trial](/demo)