Market Insight: The Impact Of Climate Risk On Third-Party Risk Management

12 Sep, 2025

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Executive Summary

Climate risk is driving significant operational and financial disruption across supply chains, exposing weaknesses in traditional third-party risk management (TPRM) approaches. Extreme weather events, resource shortages and infrastructure failures are impacting vendor performance, causing delays, increased costs and unplanned downtime. As businesses face growing pressure to strengthen supply chain resilience, many are turning to TPRM software for greater visibility into climate-related vulnerabilities across their supplier base. This report explores how climate risk is reshaping the TPRM software landscape, outlining the key drivers, market trends and digital capabilities that vendors should prioritize to manage its short- and long-term impacts. While still early days for many organizations, digital solutions will play a central role in enabling long-term climate resilience. Vendors should use this report to refine their market positioning and product development efforts; corporate buyers can use it to assess software capability priorities and make more informed software selection decisions in an evolving market.

Impacts associated with climate risks are increasing in frequency and intensity
Business and financial impacts across the supply chain are expected to increase
There is a disconnect between firms’ stated concerns and risk management strategies for climate risk
TPRM providers need to advance climate risk capabilities to help firms bridge the gap between aspirational and proactive climate risk management
Figure 1. Divided views on climate change risks to physical assets
Figure 2. Developing best practices for TPRM software roadmaps

About the Authors

Christine O'Donnell

Christine O'Donnell

Senior Analyst

Christine is a Senior Analyst at Verdantix, where she delivers research to help executives, insurers and reinsurers navigate an evolving risk landscape. Her research spans phy...

View Profile
Katelyn Johnson

Katelyn Johnson

Senior Manager

Katelyn is a Senior Manager at Verdantix, specializing in enterprise risk management and external risk and resilience. She helps executives navigate today’s evolving ris...

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