The Ultimate Guide to Vendor Risk Management Solutions in 2025
Smarter systems. Clearer processes.
by Ashley Poynter
Content Manager
PaymentWorksThe Ultimate Guide to Vendor Risk Management Solutions in 2025
In 2025, vendor risk management (VRM) is no longer a back-office checkbox. It’s mission-critical. Why? Because the risks tied to third-party vendors—fraud, compliance failures, and reputational fallout—are more complex and consequential than ever.
Just think about the average organization today. Whether you’re in education, healthcare, government, or any sector relying on outside partners (so… everyone), you’re navigating a web of vendors, subcontractors, and third-party providers. Each connection is a point of vulnerability if not properly managed.
And it’s not just about financial fraud anymore. Today’s VRM landscape includes everything from geopolitical risk and data privacy compliance to ESG accountability and cyber exposure.
That’s why we created this guide—to offer a friendly, actionable overview of what’s changed in vendor risk, what to watch for, and what a smart, scalable solution looks like in 2025. No jargon. No fluff. Just clear advice for getting vendor risk management right—no matter where you’re starting.
Table of Contents
What’s Changed—Why Vendor Risk Management Solutions Look Different in 2025
Key Risks Vendor Risk Management Solutions Must Address Today
What to Look for in a Vendor Risk Management Solution
Emerging Trends in Vendor Risk Management Technology
How to Build a Modern Vendor Risk Management Program
Modern Vendor Risk Management Solutions FTW
Get Ready For Vendor Management Appreciation 2025
Want Help Aligning Teams On Vendor Risk Management Solutions?
Interested in Regular Tips On Vendor Risk Management Solutions?
Want Personalized Guidance On Vendor Risk Management Solutions?
What’s Changed—Why Vendor Risk Management Solutions Look Different in 2025
Vendor risk used to be a relatively contained problem: a few key suppliers, some W-9s on file, a handshake or two. In 2025, however? Things look very different.
The volume of third-party relationships has exploded. Higher ed institutions are working with edtech startups, facilities vendors, and global contractors. Healthcare systems have expanded their networks to include remote providers and niche service firms. State and local governments now juggle hundreds—sometimes thousands—of external entities.
At the same time, third-party fraud has surged. According to recent FBI stats, business email compromise (BEC) scams alone caused nearly $3 billion in losses last year. Regulatory scrutiny is also rising: updated NIST standards, renewed OFAC enforcement, and tighter GDPR interpretations have all raised the stakes. And let’s not forget Nacha’s new rule change.
Then there’s the operational context: hybrid workforces, globally distributed supply chains, and an uptick in outsourcing. It’s harder to track who’s who—and whether they’re compliant, secure, or even legitimate.
All of this means that outdated, manual VRM practices just can’t keep up. You need vendor risk management solutions that are automated, real-time, and built to scale—without sacrificing accuracy or compliance.
Key Risks Vendor Risk Management Solutions Must Address Today
Modern vendor risk management solutions aren’t just about keeping a tidy vendor file. They’re about actively defending your organization against a growing list of real threats:
1. Payment fraud
This includes everything from BEC to fake vendor schemes. One wrong click on a spoofed email, and six figures could be wired to a fraudster.
Hear Sharon Loosman and Megan Catt of North Carolina State University chat about being targeted for check fraud in the video below:Â
2. Compliance and regulatory risk
Think OFAC violations, mismatched W-9s, or failure to document beneficial ownership. These issues can lead to fines, audits, or even lost funding.
Example: A local government agency faced penalties after onboarding a vendor flagged on a sanctions list, because their manual process missed the red flag.
3. Operational risk
Onboarding delays, vendor miscommunications, and duplicate records create real downstream impacts. Late payments, lost contracts, or broken procurement workflows are the result.
Example: A healthcare system lost a critical vendor over a paperwork delay. The result? Surgical equipment arriving days late.
4. Reputational risk
No one wants to be in the headlines for a data breach, fraud scandal, or ethical misstep involving a vendor.
Example: A school district’s vendor was found guilty of labor violations. The district was dragged into the PR nightmare due to lack of proper vetting.
What to Look for in a Vendor Risk Management Solution
Choosing the right vendor risk management solution isn’t just about ticking boxes; it’s about finding a platform that protects your organization and builds confidence across departments.
Here’s what to prioritize:
Centralized vendor onboarding
Your vendor onboarding process sets the tone. A solid solution provides a single, secure place to collect, verify, and store vendor information. That means no more hunting through inboxes or shared drives. Bonus points for self-service portals that let vendors input their details directly, with built-in validation checks to catch errors or inconsistencies before they enter your system. Who knows? You may even have time to focus on payments strategy like Sharon Loosman and Megan Catt of North Carolina State University. Hear them talk about their virtual card program and how the benefits of automation extend far beyond the elimination of administrative paper-pushing tasks:
Identity verification + bank account validation
It’s not enough to “think” you’re paying the right vendor. Look for tools that verify identity using government-issued tax IDs, confirm ownership of bank accounts, and flag suspicious activity before a payment goes out. This kind of validation helps you stop fraud in its tracks—and makes your finance team sleep better at night.
Continuous monitoring
Vendor risk is dynamic. Your system should continuously track vendor status, looking for things like expired certificates, sanction list hits, or red flags that pop up after onboarding. Real-time alerts and dashboards help your team stay one step ahead, instead of reacting after something goes wrong.
ERP + Finance Integration
If your VRM tool lives in a silo, you’re just moving the problem. The best solutions integrate with your ERP or accounting systems so that vendor data stays current, payments flow efficiently, and compliance checks don’t disrupt workflows. The goal? Fewer swivel-chair tasks and better data accuracy across systems.
Friendly UX (for everyone)
Let’s face it—if the tool is frustrating to use, people won’t use it properly. Prioritize platforms with clean, intuitive interfaces that make life easier for both internal teams and external vendors. Clear prompts, mobile-friendly design, and smart automation all help reduce errors and speed up processes.
Strong reporting + audit trails
Whether it’s an internal review or an external audit, your VRM platform should have your back. Look for robust reporting tools that let you quickly track what changed, when, and by whom. Built-in audit trails not only support compliance, they help you make faster, more confident decisions when issues arise.
A strong vendor risk management solution reduces manual work, lowers the risk of human error, and helps internal teams operate with clarity and control—all while building vendor trust.
Emerging Trends in Vendor Risk Management Technology
The VRM space is evolving fast, and smart organizations are staying ahead by embracing the next generation of tools. Here’s what’s trending in 2025:
AI + machine learning
AI isn’t just a buzzword. It’s being used to detect fraud patterns, assess risk scores, and even predict which vendors may cause compliance issues. These systems learn from your data and flag threats before they become disasters.
API-first platforms
You shouldn’t need a new tool for every process. Modern VRM solutions offer flexible APIs that connect with your existing tech stack—whether that’s procurement, finance, or compliance software.
Vendor identity as a service
Think of it like Okta, but for vendors. These solutions provide a verified “vendor passport” that follows them across institutions, reducing onboarding friction and increasing trust.
Data collaboration across institutions
Especially in government and education, there’s a shift toward collective risk management. Shared platforms and trust networks let institutions pool insights and flag risky vendors before issues spread.
Vendor trust networks
This is the big one. Instead of validating vendors from scratch every time, organizations are tapping into secure networks that confirm a vendor’s legitimacy based on pre-verified credentials.
PaymentWorks is proud to be leading in many of these areas—helping clients automate onboarding, verify vendor identity, and build networks of trust that extend far beyond a single transaction.
How to Build a Modern Vendor Risk Management Program
A tool alone won’t fix vendor risk. You need a solid program that brings together the right people, processes, and technology. Here’s how to build it:
Define policy + ownership
Clarify who owns vendor risk. Set escalation paths and document your thresholds for what constitutes “high-risk” vendors.
Map your existing workflow
Visualize how a vendor moves through your system—from request to payment. Where are the gaps? Where’s the duplication? Where are approvals missed?
Spot the pain points
Identify where manual steps are slowing you down—or creating risk. Think: emailed forms, unclear approval chains, lack of vendor verification.
Evaluate solutions thoughtfully
Don’t just digitize what’s broken. Look for vendor risk management solutions that simplify and strengthen your workflows rather than just replicate them.
Align stakeholders
Legal, finance, IT, and procurement all need to be in the loop. Cross-functional buy-in is critical to a successful rollout.
Invest in education
MChange won’t stick without training. Make VRM best practices part of onboarding, performance reviews, and regular check-ins.
Quick Checklist
- Â Is your vendor onboarding centralized and secure?
- Â Do you verify bank info and identity automatically?
- Â Are you monitoring vendor status continuously?
- Â Can you prove compliance with a clear audit trail?
- Â Are legal, IT, finance, and procurement aligned?
- Â Do vendors find your onboarding experience easy?
Modern Vendor Risk Management Solutions FTW
Vendor risk management isn’t optional in 2025—and it definitely isn’t manual. The volume, velocity, and variety of third-party relationships today demand smarter systems and clearer processes.
Whether you’re tightening existing controls or building a program from scratch, modern vendor risk management solutions can help you go from reactive to proactive, from fragmented to connected.
At PaymentWorks, we believe in making vendor risk manageable, not overwhelming. The tools are here. The stakes are clear. Now it’s about taking that next step.
Ready to get ahead of the risk? Let’s talk.
Get Ready For Vendor Management Appreciation 2025
The Vendor Management Appreciation Day (#VMAD) celebration continues in 2025! And you should join us.Â
Why? Because there’s no expiration date on honoring one of the most important, under-recognized roles across industries: vendor management.
Join us in observing Vendor Management Appreciation Day (VMAD)! We’re gearing up for the 2025 celebration, and we want you to be a part of it!
VMAD is a new holiday geared toward unifying vendor management professionals and celebrating innovation in the field.
Moreover, we’ve released gifts each month to help you supercharge your vendor management efforts. Additionally, we’re planning some awesome events so everyone can connect and celebrate the important, strategic role of vendor management.
In the meantime, learn more here, and grab some free vendor management goodies.
Want Help Aligning Teams On Vendor Risk Management Solutions?
Explore our blogs below. They’re filled with action items you can implement right away.
Why a Weak Vendor Identification Process at Onboarding Makes You Vulnerable to Fraud
Vendor Verification: How NOT to Do it and What to Do Instead
The New Face of Vendor Fraud Cases
Interested in Regular Tips On Vendor Risk Management Solutions?
Want Personalized Guidance On Vendor Risk Management Solutions?
