third party
What It Means
A third party is any external organization or vendor that provides services, software, or handles data for your company, but isn't directly part of your core business relationship with customers. This includes cloud providers, AI model vendors, data processors, software suppliers, and service contractors that touch your AI systems or data in any way.
Why Chief AI Officers Care
Third parties create significant risk exposure because they can access your data, influence your AI systems' performance, and potentially cause compliance violations that you're still legally responsible for. When AI systems rely on external vendors for training data, model hosting, or processing capabilities, any security breach, bias, or failure at the third party directly impacts your AI governance and regulatory compliance.
Real-World Example
A retail company uses Amazon Web Services to host their recommendation AI, OpenAI's API for customer service chatbots, and a contractor in India to label training data. Each of these is a third party that could expose customer data, introduce model bias, or fail in ways that harm the retailer's business and trigger regulatory penalties.
Common Confusion
People often think third party risk only applies to major vendors they directly contract with, missing the complex web of sub-vendors, open-source dependencies, and data suppliers that AI systems typically rely on. The risk extends beyond just who you pay to include anyone in your AI supply chain.
Industry-Specific Applications
See how this term applies to healthcare, finance, manufacturing, government, tech, and insurance.
Healthcare: In healthcare, third parties include cloud hosting providers, AI/ML model vendors, medical device manufacturers, billing...
Finance: In finance, third parties include core banking platforms, payment processors, credit scoring services, trading systems, ...
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Includes:
- 6 industry-specific applications
- Relevant regulations by sector
- Real compliance scenarios
- Implementation guidance
Technical Definitions
NISTNational Institute of Standards and Technology
"an entity that is involved in some way in an interaction that is primarily between two other entities. [Please see note, especially regarding NIST CSRC terms that we might incorporate into this definition.]"Source: TechTarget_third_party
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