By: David Primor

Cybersecurity conversations with small and midsize businesses (SMBs) often start with a review of the key topics such as internal defenses, antivirus, patching, firewalls, and employee training. These are important, of course, but they only cover part of the picture. There is a quieter, harder-to-control vulnerability that is becoming one of the biggest threats to SMB resilience - third-party risk. Vendors and service providers are now woven into almost every aspect of how SMBs operate. Whether it is outsourced IT, cloud applications, payroll, or digital marketing, these external partners often hold sensitive data or have direct access to networks. That means a single vendor with weak security practices can open the door to costly breaches. For SMBs without mature cybersecurity programs, vendor risk is a hidden weak point that is only now coming into sharper focus.

Why Vendor Risk Is Growing

Third-party risk is climbing the threat list for several reasons. First, SMBs are increasingly outsourcing specialized functions to reduce overhead and gain expertise they cannot maintain in-house. While this helps them scale quickly, it also expands the network of vendors and potential points of exposure. A vendor handling payroll or customer data can be far more attractive to attackers than the SMB itself because smaller suppliers often have fewer security controls.

Second, attackers are targeting the supply chain. High-profile breaches over the past decade have shown that cybercriminals can bypass large enterprise defenses by exploiting weaker security at smaller suppliers. For SMBs, this means that their cybersecurity is only as strong as the “weakest” vendor they rely on. Even heavy investment in firewalls and endpoint security can be undone by a single unprotected vendor account.

Third, regulatory and customer expectations are rising. SMBs that handle sensitive data are increasingly expected to demonstrate formal vendor due diligence. This isn’t limited to industries like healthcare, finance, or government contracting. Even small businesses working with enterprise clients or third-party marketplaces are being asked to provide proof of vendor risk assessments, security certifications, and compliance protocols. Simply put, SMBs can no longer treat vendor security as someone else’s problem.

The Opportunity

This is where Managed Service Providers (MSPs) and Managed Security Service Providers (MSSPs) can make a real difference. Most SMBs lack the staff or expertise to build a strong Third-Party Risk Management (TPRM) program, but MSPs and MSSPs are already trusted to deliver IT and security services and are in a prime position to fill this gap. TPRM is not just a needed service; it is also a business opportunity. By including vendor risk assessments, monitoring, and reporting in their service offerings, MSPs and MSSPs can stand out in a crowded market.

TPRM also opens up new revenue streams. Assessing vendor risk usually uncovers gaps that need attention, like unpatched software, inadequate access controls, or missing policies. In some cases, clients’ vendors are so impressed by the assessments that they hire the service provider to manage their own third-party risk.. MSPs and MSSPs can turn vendor risk assessment findings into services such as compliance consulting or cybersecurity advisory. This moves them beyond technical support and into the role of strategic partner, helping SMBs navigate a complex security landscape while also growing their own business. 

Making TPRM Practical for SMBs

For years, TPRM was seen as too resource-intensive for smaller businesses. Manually assessing each vendor, repeating the process across multiple clients, and producing audit-ready reports could quickly overwhelm SMB budgets or MSP teams. Traditional approaches were slow, cumbersome, and often impractical for smaller organizations that needed results fast.

Modern approaches, however, make TPRM manageable and repeatable. Today’s MSPs can deliver these services efficiently by using guided workflows, reusable templates, automation and even tools built specifically for them. Standardized questionnaires simplify vendor data collection, while centralized management tools track shared vendors across multiple clients to eliminate redundancy. Integrating internal and vendor risk data into a single platform gives MSPs a clear view of how third-party vulnerabilities impact each client’s overall security posture.