Managing AI Risks in the Vendor Ecosystem

October 20, 2025

Artificial Intelligence is revolutionizing the way organizations operate. Businesses are now increasingly looking at how they can integrate AI solutions into their service offerings as part of their digital transformation efforts to boost productivity, enhance efficiency and improve decision-making. As its footprint expands, organizations often neglect a critical blind spot: the third-party AI vendors that constitute an integral part of their supply chain ecosystem.

Most organizations have conventional Third-Party Risk Management (TPRM) programs in place to manage their vendors, but traditional TPRM practices cannot address gaps in vendor AI practices like AI model drift, inconsistent data governance or misaligned compliance standards. This can expose organizations to data breaches, biased decisions and regulatory penalties. In the current landscape, AI vendors cannot be evaluated through conventional methods alone; they require a distinct vendor assessment and oversight approach.

Organizational Reliance on Third-Party AI Capabilities and Related Risks

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1. MIT Sloan - Third-party AI tools pose increasing risks for organizations
2. Venminder - State of Third-Party Risk Management_2024

Hidden Risks of Third–Party AI

What makes AI vendor risk particularly challenging is its lack of transparency. AI system vendors may not provide full disclosure, creating uncertainty about where and how AI is applied within their services. At the same time, sensitive data may be stored, shared or repurposed in ways that fall outside enterprise policies. 

Organizations are inheriting risks ranging from sensitive data exposure and biased algorithms to regulatory non-compliance when vendors use AI without clear governance. In short, businesses are extending trust into an ecosystem they don’t fully see or manage and that is where Optiv helps our clients take control.

Where Traditional TPRM Efforts Fall Short

Most organizations already have Third-Party Risk Management (TPRM) programs in place. These frameworks focus on cybersecurity, compliance and financial stability. But AI changes the risk landscape in ways traditional TPRM does not cover like:

• Opaque AI models: Vendors may use AI systems that are unexplainable or untested for bias.
• Data misuse: Sensitive company or customer data can end up being used to train third-party AI models.
• Shadow AI: Vendors might integrate unsanctioned AI tools without disclosure.
• Dynamic risk profiles: Unlike static vendor risks, AI models evolve, making one-time due diligence insufficient.

This gap leaves businesses vulnerable to reputational damage, legal liability and operational setbacks. Optiv helps clients close this gap with AI-specific assessments and monitoring frameworks designed to adapt as risks evolve.

Building Trust in the AI Supply Chain

To reduce AI-specific risks, organizations must go beyond standard TPRM and implement AI-focused safeguards. Optiv guides clients in building trust into their AI supply chain by integrating continuous oversight, transparency and accountability into every vendor relationship.

Here are four pillars of our approach:

1. AI Risk Assessment Reports

Risk assessment in the context of AI vendors extends far beyond conventional vendor due diligence. It brings together multiple dimensions governance, security, model oversight, compliance and business continuity into a comprehensive view. This means examining how vendors manage AI system documentation, model lifecycle management, track data lineage and enforce controls around encryption and access. It also involves assessing their ability to uphold ethical AI practices, align with evolving AI regulations and maintain vendor stability. 

To ensure rigor and consistency, our approach is anchored in established global frameworks such as the NIST AI Risk Management Framework, OWASP AI Security Guidelines and ISO/IEC 42001 AI Management Systems Standard delivering a structured and industry-aligned evaluation.

2. Continuous Alignment to Evolving Regulations

AI regulations are advancing rapidly across jurisdictions, with landmark initiatives such as the EU AI Act (European Union Artificial Intelligence Act), the U.S. AI Bill of Rights and multiple industry-specific guidelines setting new expectations for compliance and accountability. For organizations relying on third-party AI services, this presents a constant challenge as vendors may operate under varying legal regimes, interpret standards differently or fail to keep pace with evolving obligations. Any misalignment in these areas does not remain confined to the vendor, it directly exposes the enterprise to compliance penalties and reputational harm. 

Compliance can no longer be a one-time check; it demands continuous oversight. Our regulatory compliance dashboard offers visibility into vendor alignment with global and sector-specific standards, helping leaders spot gaps, prioritize remediation and ensure their AI ecosystems remain future-ready.

3. Vendor AI Usage Analysis

Optiv helps clients maintain a dynamic AI usage workbook that provides a clear view of how vendors are leveraging AI, where shadow AI is emerging and how sensitive data might be used or shared. By maintaining this living inventory, organizations can continuously monitor vendor exposure, identify areas of elevated risk and prioritize vendors that require deeper review. This proactive approach reduces blind spots, improves oversight and strengthens overall resilience against AI-driven disruptions.

4. Reinforced Vendor Contracts

Contracts are one of the most effective tools for managing third-party AI risk. They not only define the relationship with vendors but also establish enforceable safeguards that protect against misuse, data exposure and regulatory non-compliance. By embedding AI-specific provisions into agreements, organizations can create stronger accountability, improve visibility into vendor practices and ensure alignment with evolving legal and ethical standards. We work with procurement and legal teams to incorporate clauses such as:

• Audit rights for AI system governance
• Data use, retention and deletion obligations
• Liability transfer for AI-generated outputs
• Incident notification requirements
• Compliance warranties tied to AI regulations

With Optiv’s guidance, contracts become a proactive defence mechanism, ensuring vendors remain accountable and organizations stay protected.

AI is no longer just another IT tool, it is a transformational force that amplifies both opportunities and risks. Traditional TPRM efforts, while valuable, are not designed to manage the complexities of AI.

At Optiv, we help clients safeguard innovation by delivering AI-specific assessments, compliance monitoring, usage tracking and reinforced contracts. This ensures a vendor ecosystem rooted in trust, resilience and accountability. The future of AI-driven business success depends not only on innovation but also on the strength of the governance frameworks that Optiv helps our clients build and operationalize.

Learn more about our AI services at Optiv.com/AI.