Vendor Concentration Risk

Vendor concentration risk refers to the business exposure that arises when an organization becomes overly dependent on a single AI vendor or a small number of vendors for critical systems, models, or services. This creates vulnerabilities because vendor failures, pricing changes, service disruptions, or strategic pivots can directly compromise an enterprise's operations and compliance posture. For AI governance, managing vendor concentration is essential because it affects supply chain resilience, negotiating power, and the ability to maintain independent oversight of AI systems across the organization.

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