Blockchain Technology as Trust Infrastructure for Third-Party Risk Management

Abstract

Contemporary organizational ecosystems are critically vulnerable in third-party risk management frameworks due to centralized databases, fragmented documentation systems, and manual processes of assessment. Traditional approaches result in huge inefficiencies through redundant audits, version control complexities, and delayed responses for compliance along multi-jurisdictional vendor networks. The blockchain architecture introduces a fundamental architectural transformation through distributed ledger mechanisms, creating immutable audit trails, cryptographic verification protocols, and decentralized trust formation across organizations. The article reviews how blockchain works as an integrity infrastructure within regulatory technology ecosystems, allowing the automation of compliance through smart contracts, making transparent records available for authorized stakeholders, and removing single-point vulnerabilities from centralized control systems. The technical mechanisms for implementation include immutable vendor record systems, which integrate fragmented documentation into unified, tamper-proof ledgers; smart contract automation that allows deterministic outcomes in governance; and distributed assurance networks, which allow audit verification among multiple organizations. Regulatory dimensions are related to preserving privacy through hybrid on-chain and off-chain architectures, legal recognition challenges of smart contracts within jurisdictional frameworks, and ethics in governance requirements for human input within automated ecosystems of decisions. Implementation challenges involve the complexity of legacy system integration, the development of a structure for consortium governance, scalability constraints, and the scarcity of talent. Future trajectories include hybrid ecosystems, integrating blockchain's immutability with advanced analytics, tokenized reputation frameworks, and integrations with emerging technologies such as artificial intelligence and digital identity systems toward next-generation vendor risk governance.