Third-Party Risk Management Software vs. Spreadsheets: A cost comparison

The third-party risk landscape in 2026

With cyber risk increasing, security teams have had to work harder to secure their home networks. Little did they know they would face a significant backdoor vulnerability. That weakness arises from attackers side-stepping the perimeter to instead infiltrate organizations through vendors, suppliers, cloud service providers (CSPs) and other third-party partners.

How big is third-party dependence? Research shows that 89% of the top 100,000 Alexa websites rely heavily on third-party DNS, CDN or CA providers. If these providers go down, the websites that depend on them could also go down.

Dependence is not the sole third-party risk factor companies face. Concentration is just as important. The use of third-party services is heavily concentrated among a few providers. In fact, the top three providers of DNS, CDN or CA services could bring down up to 70% of the top 100,000 websites.

Organizations with only a fourth-party relationship with a provider remain at risk. These indirect relationships do not guarantee security. Quite the opposite. Indirect dependencies might worsen the impact of an incident.

Unfortunately, for many organizations, third-party risks are not speculative. Third-party incidents are on the precipitous rise.

Foremost among these incidents are third-party breaches. A 2023 MIT paper found that 98% of organizations work with a vendor that suffered a data breach in the past two years. A 2025 global third-party breach report showed that 35.5% of all data breaches originated from third-party compromises in 2024. This is a 6.5% increase from the previous year.

Even more concerning, third-party breaches are likely undercounted. An organization might not detect the breach. Or it may decide not to reveal the breach’s third-party source.

Whether disclosed or not, third-party incidents have a significant impact. Regulatory fallout is just one. Regulations like the Digital Operational Resilience Act (DORA) require organizations to report breaches immediately or risk significant fines.

It is often the role of risk managers to catalogue third-party risk across their vendor ecosystems. Although the field has gradually been adopting TPRM software, it has not done so completely – or quickly enough.

The mismatch is evident. Attackers often use the latest emerging technologies, like genAI, to exploit third-party vulnerabilities. But risk managers are still shoehorning 2006 technology to manage this 2026 challenge.

The illusion of free: Why organizations start manual

As third-party risk has increased, dedicated third-party risk management programs have emerged. Given their relative infancy, it is not surprising that these programs began with manual tools and processes.

After all, many were established in the immediate wake of major breaches or new regulations. The imperative was to get up and running quickly. Automated third-party risk management platforms had to wait.

Besides urgency, organizations tend to start manual for the following reasons:

Zero upfront capital

Software comes with licensing fees. Every organization already has access to a cloud-based spreadsheet application. The costs are baked in.

Familiarity trap

Because they often come from risk, business continuity or supply-chain management, third-party risk managers are comfortable with spreadsheets.

Their analysts already know these applications. They do not need to take time out of their days to train on new technology – even if that technology enhances productivity and efficiency down the line. Many programs, even those outside of third-party risk management, fall into this familiarity trap until critical events shake them out of their complacency.

Something beats nothing fallacy

Risk and resilience are often treated as mere compliance issues. Senior leaders tend to view these programs as cost-avoidance measures rather than strategic differentiators.

This thinking might be changing. Yet it still explains why many organizations settle for “anything will do” when it comes to outfitting their risk management programs.

The hidden costs of manual spreadsheets

Risk management is the process of identifying, assessing and remediating threats to an acceptable level. Effective risk identification is the cornerstone of this process.

Manual spreadsheets do not help expose hidden risk, though. They often act more as a veil than a lens. Critical vulnerabilities lie hidden from sight.

Hidden risk is still risk, though. And risk eventually turns into cost. Relying on manual tools creates a visibility gap that organizations can no longer afford. Here are the specific hidden costs of the manual approach:

Inefficiency

The greatest cost is inefficiency. Manual workflows take more time. They also require more effort than automated workflows in TPRM software.

Indeed, each manual spreadsheet must be built from the ground up. And the work is not done then. Risk analysts still have to validate their new workflows. They must chase down responses from risk managers. The process often devolves into lengthy emails and deliberations.

For significant projects, the process stretches out for months. Beyond costing the company time, the sheer expenditure in labor from drafting, emailing and auditing individual spreadsheets creates a bottleneck for the risk department.

Opportunity cost

The time lost to manual workflows is taken from strategic risk intelligence. Instead of being consumed by administrative overhead, teams should be proactively detecting emerging threats to improve preparedness.

Inaccuracy

Human-dependent, manual workflows are prone to errors. The most common are simple typos or formulation mistakes. These risks compound when multiple stakeholders share and edit spreadsheets, which is often a necessity in third-party collaborations.

Even when only one person manages a sheet, version sprawl often occurs. Different team members create fragmented trackers for the same purpose. This leads to a lack of systematic structure or governance.

Stale intelligence

In 2026, a spreadsheet might become obsolete the moment it is saved. Manual files lack native integration with live security-rating feeds and external risk signals. They only provide a snapshot of the past. This prevents risk managers from performing real-time threat monitoring.

Inconsistency

Without a centralized system, version control becomes a significant barrier to effective risk management. Multiple analysts editing disconnected files can create data silos that undercut each other’s work. The lack of a single source of truth leads to conflicting risk scores and fragmented visibility. This makes it impossible to gain an accurate view of vulnerabilities across the third-party ecosystem.

Security

Spreadsheet applications are designed for seamless sharing. But easy access is the opposite of secure risk management. In TPRM, specifically, spreadsheets contain highly sensitive information about vendors, including contracts, risk assessments and remediation plans. These files should be restricted with granular access controls.

Quantifying the risk of the worst possible time

Although indirect, the costs of using manual spreadsheets add up over time. Yet they always come due when a third-party incident occurs.

Operational downtime

Relying on cloud-based spreadsheets to monitor CSPs creates its own single point of failure. The irony is often realized too late. During a major DNS or infrastructure outage, like the global disruptions of July 2024, the very risk map you need might become inaccessible. A risk register hosted on a CSP that is down does not help during the most critical hours of an incident.

Limited situational awareness

Situational awareness is the difference between a controlled response and a chaotic one. Manual spreadsheets can impede situational awareness. They often require filtering and searching. As a result, risk managers lose time when trying to identify which vendors are impacted.

Response inefficiency

Even if a spreadsheet is accessible, it remains a static tool in a dynamic crisis. Without automated alerting or integrated notification workflows, risk managers are forced to manually coordinate with stakeholders across the business. When every second counts, the lack of built-in activation functionality increases the mean time between the detection of a threat and the mobilization of a response.

Noncompliance

Regulators do not care if your spreadsheet is locked or out of date. Statutes like DORA and APRA CPS 230 mandate strict notification windows. These windows last days not weeks. Relying on a static document to trigger notifications can lead to massive regulatory fines and untold reputational damage.

The ROI of third-party risk management software

While spreadsheets fail under pressure, dedicated TPRM solutions help ensure operational resilience. Beyond merely cataloguing vendors, these platforms provide the unifying layer needed to mitigate risk, accelerate incident response and maintain a defensible audit trail for regulatory compliance. By replacing static lists with dynamic workflows, they enable teams to pinpoint and address top issues across the vendor ecosystem in real time.

Here is how they deliver ROI:

Increased collaboration

Whether between teams, across organizations or with third parties, static, manual spreadsheets stymie collaboration. An automated platform facilitates collaboration. The solution gives third parties their own workspace to input their own data. This results in less manual work and better data quality.

Added value of automation

The value of automation extends beyond simple notifications. It can drive accountability, as well. By automatically assigning tasks and tracking completion within a vendor-facing workspace, the software ensures that due diligence and remediation are delivered on time without requiring constant manual follow-ups from your team.

Ongoing visibility

Spreadsheets only permit point-in-time checks. Platforms enable continuous lifecycle management. For instance, risk managers can monitor service-level agreements (SLAs) and security performance in real time. This allows for immediate intervention if a vendor's risk posture shifts or contractual obligations are missed.

Improved preparedness

Dedicated platforms act as an intelligence hub for risk intelligence. By integrating live threat feeds directly into your vendor profiles, analysts can move from reactive firefighting to proactive defense. The software helps them identify emerging vulnerabilities before they escalate into costly disruptions.

Third-party risk management software versus manual spreadsheets: The final analysis

In 2026, spreadsheets are no longer free. Nor do they just slow your team down. Replete with indirect costs, manual workflows actually heighten the very risks they are meant to mitigate.

With third-party breaches at an all-time high, the choice is clear. Continue paying escalating hidden costs. Or embrace the efficiency and security of an automated platform to elevate your operational resilience.

Need help upgrading your TPRM tech stack? Request a demonstration to chat with one of our solutions experts today.