CTPRP Certified Third-Party Risk Professional (CTPRP) Questions and Answers

Scoping is a critical step in third party assessments, as it determines the scope and depth of the assessment based on the inherent risk, impact, and complexity of the vendor relationship. Scoping helps to ensure that the assessment is relevant, efficient, and consistent with the outsourcer’s risk appetite and objectives. Scoping also helps to avoid over or under assessing the vendor, which could result in unnecessary costs, delays, or gaps in risk management. Scoping is not a one-time activity, but rather an ongoing process that should be reviewed and updated throughout the vendor lifecycle. Scoping should be aligned with the outsourcer’s third party risk management framework and policies, and follow the best practices and guidelines provided by the Shared Assessments Program and other industry standards. References:

• 1: THIRD PARTY RISK MANAGEMENT TOOLKIT - Shared Assessments, pages 4-6
• 2: How Dynamic Scoping Can Improve Vendor Risk Assessments - ProcessUnity
• 3: Inherent Risk Tiering for Third-Party Vendor Assessments - MindPoint Group

Indemnification is a contractual obligation by which one party agrees to compensate another party for any losses or damages that may arise from a specified event or circumstance. Mutual indemnification means that both parties agree to indemnify each other for certain losses or damages, such as those caused by a breach of contract, negligence, or violation of law. Mutual indemnification can enable each party to share the amount of information security risk, as it can provide a mechanism for allocating the responsibility and liability for any security incidents or breaches that may affect either party or their customers. Mutual indemnification can also incentivize each party to maintain adequate security controls and practices, as well as to cooperate and communicate effectively in the event of a security incident or breach.

The other options are not contract clauses that enable each party to share the amount of information security risk, because:

• A. Limitation of liability is a contract clause that limits the amount or type of damages that one party can claim from another party in the event of a breach of contract or other legal action. Limitation of liability does not enable each party to share the amount of information security risk, as it can reduce or cap the liability of one party, but not necessarily distribute or balance the risk between both parties.
• B. Cyber insurance is a type of insurance policy that covers the costs and losses resulting from cyberattacks, data breaches, or other cyber incidents. Cyber insurance does not enable each party to share the amount of information security risk, as it can transfer or mitigate the risk to a third-party insurer, but not necessarily allocate or share the risk between both parties.
• C. Force majeure is a contract clause that excuses one or both parties from performing their contractual obligations in the event of an unforeseen or unavoidable event or circumstance that is beyond their control, such as a natural disaster, war, or pandemic. Force majeure does not enable each party to share the amount of information security risk, as it can suspend or terminate the contract in the event of a force majeure event, but not necessarily distribute or balance the risk between both parties.

References:

• Shared Assessments CTPRP Study Guide, page 62, section 5.2.2: Contractual Terms
• Third-Party Risk Management: Vendor Contract Terms and Conditions, section: Indemnification
• Cybersecurity risks from third party vendors: PwC, section: Contractual terms and conditions
• [Third-Party Risk Management: The 3rd Party Ecosystem: How to Manage the Risk While Keeping the Benefit], section: Contractual Terms and Conditions

Application version control standards for software release updates are not part of the IT change management approval process, but rather a technical aspect of the software development lifecycle. The IT change management approval process is a formal and structured way of evaluating, authorizing and scheduling changes to IT systems and infrastructure, based on predefined criteria and roles. The IT change management approval process typically includes the following components123:

• A change request form that captures the details, rationale, impact, risk and benefits of the proposed change
• A change approval board (CAB) or other authorized approvers who review and approve or reject the change request based on the business case, feasibility and alignment with the organization’s objectives and policies
• A documented audit trail for all changes, especially emergency changes, that records the date, time, reason, approver and outcome of each change
• A defined roles and responsibilities matrix that clarifies the expectations and accountabilities of each stakeholder involved in the change management process, such as the change manager, change owner, change coordinator, change implementer and change requester
• A set of guidelines that restrict the approval of changes to only authorized personnel who have the appropriate knowledge, skills and authority to make decisions about the changes References:
• 1: Change Approval Process in ITIL Change Management
• 2: Guide to the IT Change Requests Approval Process
• 3: Overview of the change management approval process

The scenario described indicates a lack in the vendor's Asset Management Program. An effective Asset Management Program includes maintaining an accurate inventory of hardware and devices, monitoring their status, and promptly identifying and responding to any losses or discrepancies. The failure to discover the loss of laptops and a tablet that processed company data for two years suggests deficiencies in tracking and managing physical assets. This lapse can lead to risks associated with data security, regulatory compliance, and operational integrity. A robust Asset Management Program should ensure that all assets are accounted for, their usage is monitored, and any anomalies or losses are quickly identified and addressed.

References:

• IT asset management standards, such as ISO/IEC 27001 (Information Security Management), emphasize the importance of maintaining an inventory of assets and implementing appropriate controls to safeguard organizational assets.
• The "IT Asset Management Handbook" by the International Association of IT Asset Managers (IAITAM) provides guidelines on establishing a comprehensive Asset Management Program, including best practices for asset tracking, monitoring, and loss prevention.

Vendor inventory is a list of all the third-party vendors that an organization engages with, along with relevant information about their products, services, contracts, and risks. Vendor inventory is a crucial tool for vendor risk management, as it helps an organization identify, assess, monitor, and mitigate the potential risks associated with its vendors. Vendor inventory also helps an organization prioritize its vendor oversight activities, allocate its resources efficiently, and comply with its regulatory obligations12.

One of the key steps in creating and maintaining a vendor inventory is to assign a risk rating and a vendor classification to each vendor, based on various attributes that reflect the level of risk and criticality they pose to the organization. The risk rating and vendor classification help an organization determine the frequency and depth of its vendor due diligence, review, and audit processes, as well as the appropriate controls and remediation actions to implement3 .

Some of the common attributes used to assign risk rating and vendor classification are :

• Type of data accessed, processed, or retained: This attribute indicates the sensitivity and confidentiality of the data that the vendor handles on behalf of the organization, such as personally identifiable information (PII), protected health information (PHI), financial information, intellectual property, etc. The more sensitive and confidential the data, the higher the risk rating and vendor classification, as the vendor must comply with strict security and privacy standards and regulations, and the organization must protect itself from data breaches, leaks, or losses.
• Type of systems accessed: This attribute indicates the access level and privileges that the vendor has to the organization’s systems, such as networks, servers, databases, applications, etc. The more access and privileges the vendor has, the higher the risk rating and vendor classification, as the vendor must adhere to the organization’s policies and procedures, and the organization must safeguard itself from unauthorized or malicious activities, such as cyberattacks, sabotage, or espionage.
• Type of network connectivity: This attribute indicates the mode and frequency of the data transmission and communication between the vendor and the organization, such as online, offline, real-time, batch, etc. The more network connectivity the vendor has, the higher the risk rating and vendor classification, as the vendor must ensure the availability, integrity, and reliability of the data, and the organization must prevent data interception, modification, or disruption.

The type of contract addendum is NOT an attribute used to assign risk rating and vendor classification, as it is not directly related to the risk or criticality of the vendor. The type of contract addendum is a legal document that modifies or supplements the original contract between the vendor and the organization, such as adding or deleting terms, clauses, or provisions. The type of contract addendum may reflect the changes or updates in the vendor relationship, such as scope, duration, price, service level, etc., but it does not indicate the level of risk or impact that the vendor has on the organization. Therefore, the type of contract addendum is not a relevant factor for vendor risk assessment and management . References:

• 1: Vendor Inventory - Shared Assessments
• 2: Vendor Inventory Management: A Guide to Third-Party Risk Management
• 3: Vendor Risk Rating - Shared Assessments
• : [Vendor Risk Rating: How to Rate Your Vendors | Smartsheet]
• : [Vendor Classification - Shared Assessments]
• : [Vendor Tiering: How to Classify Your Vendors | Smartsheet]
• : Contract Addendum - Shared Assessments
• : What is a Contract Addendum? | Definition and Examples | Imperva

Asset management is the process of identifying, tracking, and managing the physical and digital assets of an organization. An asset management program is a set of policies, procedures, and tools that help to ensure the optimal use, security, and disposal of assets. According to the Shared Assessments CTPRP Study Guide1, an asset management program should include the following components:

• Asset inventories: A comprehensive and accurate list of all assets owned, leased, or used by the organization, including hardware, software, data, and services. Asset inventories should include connections to external parties, networks, or systems that process data, as this may introduce additional risks and dependencies12.
• Asset owners: A clear assignment of roles and responsibilities for each asset, including an organizational owner who is accountable for the asset throughout its life cycle. Asset owners should ensure that assets are properly maintained, updated, secured, and disposed of in accordance with the organization’s policies and standards13.
• Asset classification: A consistent and objective method of categorizing assets based on their criticality or data sensitivity. Asset classification helps to determine the appropriate level of protection, monitoring, and testing for each asset, as well as the potential impact of asset loss or compromise1 .
• Asset controls: A set of measures and mechanisms that help to safeguard assets from unauthorized access, use, modification, disclosure, or destruction. Asset controls may include physical, technical, administrative, or contractual means, such as locks, encryption, passwords, policies, or agreements1 .

The statement that is least likely to represent a component of an asset management program is D. Asset inventories should track the flow or distribution of items used to fulfill products and Services across production lines. This statement describes a supply chain management function, not an asset management function. Supply chain management is the process of planning, coordinating, and controlling the flow of materials, information, and services from suppliers to customers. Supply chain management may involve some aspects of asset management, such as inventory control, quality assurance, or vendor risk management, but it is not the same as asset management . Asset management focuses on the assets that the organization owns or uses, not the assets that the organization produces or delivers.

References:

• 1: Shared Assessments. (2020). Certified Third Party Risk Professional (CTPRP) Study Guide.
• 2: ISACA. (2019). COBIT 2019 Framework: Governance and Management Objectives. APO03 Manage enterprise architecture.
• 3: ISO. (2018). ISO/IEC 27001:2018 Information technology — Security techniques — Information security management systems — Requirements. Clause 8.1.2 Asset management roles and responsibilities.
• : NIST. (2013). NIST Special Publication 800-53 Revision 4 Security and Privacy Controls for Federal Information Systems and Organizations. RA-2 Security Categorization.
• : NIST. (2013). NIST Special Publication 800-53 Revision 4 Security and Privacy Controls for Federal Information Systems and Organizations. CM-8 Information System Component Inventory.
• : APICS. (2018). APICS Dictionary, 16th edition. Supply chain management.
• : ISACA. (2019). COBIT 2019 Framework: Governance and Management Objectives. APO13 Manage security.

Background check requirements are applicable for vendors or service providers based outside the United States, as well as those based within the country. According to the Shared Assessments Program, background checks are a key component of third-party risk management and should be conducted for all third parties that have access to sensitive data, systems, or facilities, regardless of their location1. The FCRA also applies to background checks performed by U.S. employers on foreign nationals who work outside the U.S. for a U.S. employer or its affiliates2. Therefore, statement A is false and the correct answer is A. References:

• Shared Assessments Program: Third Party Risk Management Fundamentals
• Background Checks for Contractors or Vendors

A BCP or IT DR plan is a set of procedures and actions that an organization takes to ensure the continuity and recovery of its critical business functions and IT systems in the event of a disruption. A BCP or IT DR plan typically covers the following aspects12:

• Identification and prioritization of critical business functions and IT systems
• Assessment and mitigation of risks and threats to the organization
• Allocation and mobilization of resources and personnel
• Communication and coordination with internal and external stakeholders
• Testing and updating of the plan

Among the four examples of a response to external environmental factors, protocols for social media channels and PR communication are the least likely to be managed directly within the BCP or IT DR plan. This is because social media and PR communication are not critical business functions or IT systems that need to be restored or maintained during a disruption. They are rather supplementary tools that can be used to inform and engage with the public, customers, partners, and media about the organization’s situation and actions3. Therefore, protocols for social media and PR communication are more likely to be part of a crisis communication plan, which is a separate but related document that outlines the strategies and tactics for communicating with various audiences during a crisis.

The other three examples are more likely to be managed directly within the BCP or IT DR plan, as they directly affect the organization’s ability to perform its critical business functions and IT systems. For instance, a response to a natural or man-made disruption would involve activating the BCP or IT DR plan, assessing the impact and extent of the damage, deploying backup and recovery solutions, and restoring normal operations as soon as possible. A response to a dependency on key employee or supplier issues would involve identifying and managing the single points of failure, implementing contingency plans, and ensuring the availability and redundancy of essential skills and resources. A response to a large scale illness or health outbreak would involve implementing health and safety measures, enabling remote work arrangements, and ensuring the resilience and continuity of the workforce. References:

• Business continuity vs. disaster recovery: Which plan is right … - IBM
• Business Continuity vs Disaster Recovery: What’s The Difference?
• Disaster recovery plan vs. business continuity plan: Is there a difference?
• [Crisis Communication Plan: A PR Blue Print by Sandra K. Clawson Freeo]
• [Disaster Recovery Planning (DRP) | Business Continuity Plan (BCP) | Disaster Recovery Journal]
• [Managing Third Party Risk in a Disrupted World]
• [Business Continuity Planning for a Pandemic]

This answer is the best approach because it aligns with the principles of third-party risk management, which include ensuring compliance with company policies, contractual obligations, and regulatory requirements. By asking the vendor to replace the subcontractor, the company is exercising its right to terminate or modify the relationship if the vendor fails to meet the agreed-upon standards or poses unacceptable risks. This also minimizes the potential impact of the vendor’s non-compliance on the company’s reputation, operations, and data security. The other options are less effective because they either ignore the issue, compromise the company’s policy, or rely on the vendor’s self-assessment without verification. References:

• Third Party Risk Management Framework, Module 3: Program Governance, Section 3.2: Policies and Procedures, p. 14
• Third Party Risk Management Framework, Module 4: Program Components, Section 4.3: Contracting, p. 24
• Third Party Risk Management Framework, Module 5: Program Implementation, Section 5.2: Ongoing Monitoring, p. 32
• Best-Practices Guidance for Third-Party Risk, Section: Defend Against Privileged User Risks, p. 2
• Five Best Practices to Manage and Control Third-Party Risk, Section: Best Practices for Controlling Third-Party Vendor Risks, p. 3

An enterprise information security policy (EISP) is a management-level document that details the organization’s philosophy, objectives, and expectations regarding information security. It sets the direction, scope, and tone for all security efforts and provides a framework for developing and implementing security programs and controls. According to the web search results from the search_web tool, some of the key elements of an EISP are:

• A statement of the organization’s security vision, mission, and principles that align with its business goals and values123.
• A definition of the organizational structure and accountabilities for oversight, governance, and management of information security, including roles and responsibilities of senior executives, security officers, business units, and users123 .
• A specification of the legal and regulatory compliance requirements and obligations that the organization must adhere to, such as data protection, privacy, and breach notification laws123 .
• A description of the scope and applicability of the EISP, including the types of information, systems, and assets that are covered, and the exclusions or exceptions that may apply123 .
• A declaration of the effective date and date of last review by management, as well as the frequency and criteria for reviewing and updating the EISP to ensure its relevance and adequacy123 .
• A statement of the organization’s risk appetite and tolerance, and the process for identifying, assessing, and treating information security risks123 .
• A provision of the authority and responsibility for implementing, enforcing, monitoring, and auditing the EISP and its related policies, standards, procedures, and guidelines123 .
• A determination of the access control policy and the rules for granting, revoking, and reviewing access rights and privileges to information, systems, and assets123 .
• An organization of the EISP based on an accepted control framework, such as ISO 27001, NIST SP 800-53, or COBIT, that defines the security domains, objectives, and controls that the organization must implement and maintain123 .

However, option C, a statement that security policies should be changed on an annual basis due to technology changes, is not an accurate reflection of an organization’s requirements within an EISP. While technology changes may affect the security environment and the threats and vulnerabilities that the organization faces, they are not the only factor that determines the need for changing security policies. Other factors, such as business changes, legal changes, risk changes, audit findings, incident reports, and best practices, may also trigger the need for reviewing and updating security policies. Therefore, option C is the correct answer, as it is the only one that does not reflect an organization’s requirements within an EISP. References: The following resources support the verified answer and explanation:

• 1: What Is The Purpose Of An Enterprise Information Security Policy?
• 2: Enterprise Information Security Policies and Standards
• 3: Key Elements Of An Enterprise Information Security Policy
• : Enterprise Information Security Policy (EISP) - SANS

Inherent risk refers to the level of risk that exists in the absence of any controls or mitigation measures. It represents the natural exposure to risk in operations, transactions, or activities without considering the effectiveness of any risk management practices. In the context of Third-Party Risk Management (TPRM), inherent risk assesses the potential for loss or adverse outcomes associated with a third-party relationship before any controls or risk treatments are applied. Understanding inherent risk is crucial for organizations to identify where controls are necessary and to prioritize risk management efforts based on the potential impact and likelihood of different risks. This concept is foundational in risk management frameworks and is used to guide the development and implementation of controls to reduce risk to an acceptable level, aligned with the organization's risk appetite and tolerance.

References:

• Risk management standards such as ISO 31000 (Risk Management - Guidelines) provide a framework for assessing and managing inherent risks, emphasizing the importance of understanding the baseline level of risk in decision-making processes.
• The "Third-Party Risk Management Guide" by ISACA outlines best practices for assessing inherent risks in third-party relationships, highlighting the need to evaluate the nature and scope of third-party engagements to determine the baseline risk exposure.

 This answer is correct because a change at outsourcer due to merger and acquisition (M&A) is the least likely indicator to trigger a reassessment of an existing vendor. This is because the outsourcer is not the direct vendor of the organization, but rather a third party that the vendor uses to perform some of its services. Therefore, the impact of the change at the outsourcer on the vendor’s performance and risk level may not be significant or immediate. However, the other indicators (A, B, and C) are more likely to trigger a reassessment of an existing vendor, as they directly affect the vendor’s operations, capabilities, and compliance status. For example:

• A change in vendor location or use of new fourth parties may introduce new risks such as geopolitical, regulatory, or cybersecurity risks that need to be evaluated and mitigated.
• A change in scope of existing work may alter the vendor’s access to the organization’s data or systems, which may require additional security measures and controls to protect the confidentiality, integrity, and availability of the information assets.
• A change in regulation that impacts service provider requirements may impose new obligations or standards on the vendor that need to be verified and monitored to ensure compliance and avoid penalties or fines. References:
• How to Conduct a Successful Vendor Risk Assessment in 9 Steps, Case IQ
• Why You Need to Reassess Vendor Risk on an Ongoing Basis, ThirdPartyTrust
• Vendor Assessment and Evaluation Guide, Smartsheet

A change in company point of contact does not necessarily trigger an organization to prompt a third party contract provisions review, unless the contract specifically requires such a notification or approval. A change in company point of contact may affect the communication and relationship between the parties, but it does not affect the legal terms and obligations of the contract. However, other types of external events, such as business continuity events, data breaches/privacy incidents, and changes in regulations, may have a significant impact on the performance, compliance, and risk of the contract, and therefore may require a review of the contract provisions to ensure that they are still valid, enforceable, and aligned with the parties’ expectations and objectives. For example, a business continuity event may disrupt the delivery of goods or services, a data breach/privacy incident may expose confidential or personal information, and a change in regulations may impose new obligations or liabilities on the parties. These events may trigger clauses such as force majeure, termination, indemnification, or dispute resolution, and may require the parties to renegotiate or amend the contract accordingly. References:

• Third-Party Contract Reviews: Determining Your Best Options
• Third party contracts: best practices for third party paper
• What to Look For When Reviewing Third-Party Contracts
• CTPRP Job Guide

Data privacy policies are documents that outline how an organization collects, uses, stores, shares, and protects personal information from its customers, employees, partners, and other stakeholders1. Data privacy policies should address the following key elements2:

• The purpose and scope of data collection and processing
• The legal basis and consent mechanism for data processing
• The types and categories of personal data collected and processed
• The data retention and deletion policies and practices
• The data security and encryption measures and standards
• The data sharing and disclosure practices and procedures, including the use of third parties and cross-border transfers
• The data access, correction, and deletion rights and requests of individuals
• The data breach and incident response and notification procedures and responsibilities
• The data protection officer and contact details
• The data privacy policy review and update process and frequency

Procedures for configuration settings in identity access management are typically not addressed within data privacy policies, as they are more related to the technical and operational aspects of data security and access control. Identity access management (IAM) is a framework of policies, processes, and technologies that enable an organization to manage and verify the identities and access rights of its users and devices3. IAM configuration settings determine how users and devices are authenticated, authorized, and audited when accessing data and resources. IAM configuration settings should be aligned with the data privacy policies and principles, but they are not part of the data privacy policies themselves. IAM configuration settings should be documented and maintained separately from data privacy policies, and should be reviewed and updated regularly to ensure compliance and security. References: 1: What is a Data Privacy Policy? | OneTrust 2: Privacy Policy Checklist: What to Include in Your Privacy Policy 3: What is identity and access management? | IBM : [Identity and Access Management Configuration Settings] : [Why data privacy and third-party risk teams need to work … - OneTrust] : [Privacy Risk Management - ISACA] : [What Every Chief Privacy Officer Should Know About Third-Party Risk …]

Business Continuity or Disaster Recovery (BC/DR) plans are designed to ensure the continuity of critical business functions and processes in the event of a disruption or disaster. BC/DR plans should include annual testing activities to validate the effectiveness and readiness of the plans, as well as to identify and address any gaps or weaknesses. Testing activities should cover the three main areas of BC/DR: people, processes, and technology12.

The four options given in the question represent different types of testing activities that may be included in the BC/DR plans. However, option D is the least likely to be included, as it is not a mandatory or common practice for most organizations. While it is beneficial to involve third party service providers in the BC/DR testing, as they may play a vital role in the recovery process, it is not a requirement or a standard for most industries. Third party service providers may have their own BC/DR plans and testing schedules, which may not align with the organization’s plans and objectives. Moreover, requiring their participation in industry exercises may pose challenges in terms of coordination, confidentiality, and cost34.

Therefore, option D is the correct answer, as it is the least likely to be included in the annual testing activities for BC/DR plans. The other options are more likely to be included, as they are essential for ensuring the availability and functionality of the technology, processes, and personnel that support the critical business operations. These options are:

• A. Plans to enable technology and business operations to be resumed at a back-up site. This is a common testing activity that involves simulating a disaster scenario that affects the primary site and activating the back-up site to resume the operations. This tests the technical infrastructure, data backup and recovery, and operational procedures of the BC/DR plan12.
• B. Process to validate that specific databases can be accessed by applications at the designated location. This is a common testing activity that involves verifying that the data and applications that are critical for the business functions are accessible and functional at the recovery location. This tests the data integrity, security, and compatibility of the BC/DR plan12.
• C. Ability for business personnel to perform their functions at an alternate work space location. This is a common testing activity that involves relocating the key staff to an alternate location and having them perform their normal duties. This tests the communication, coordination, and productivity of the BC/DR plan12.

References:

• 1: How to Test a Business Continuity Disaster Recovery (BCDR) Plan
• 2: Business Continuity or Disaster Recovery Testing and Training Guidelines
• 3: Third Party Risk Management and Business Continuity Planning
• 4: Third Party Risk Management: Business Continuity and Disaster Recovery

A secure SDLC is a framework that integrates security best practices and standards throughout the software development life cycle, from planning to deployment and maintenance. A secure SDLC aims to ensure that security is considered and implemented at every stage of the development process, not just as an afterthought or a compliance check. A secure SDLC can help organizations to achieve the following benefits12:

• Reduce the risk of security breaches and incidents by identifying and mitigating vulnerabilities early and continuously
• Improve the quality and reliability of software products by ensuring that they meet both the functional and the security requirements
• Save time and money by avoiding costly rework, remediation, and reputation damage caused by security flaws
• Enhance customer trust and satisfaction by delivering secure and compliant software solutions
• Foster a culture of security awareness and responsibility among developers, testers, and other stakeholders References:
• Secure SDLC | Secure Software Development Life Cycle | Snyk
• What is Secure Software Development Life Cycle (SSDLC )? - GeeksforGeeks

Threat modeling is a core element of the Microsoft Security Development Lifecycle (SDL) and a structured approach to identify, quantify, and address the security risks associated with an application12. Threat modeling helps to shape the application’s design, meet the security objectives, and reduce risk1. The best time to perform threat modeling analysis is before the application design and development activities begin, as this allows the application service provider to:

• Communicate about the security design of their systems1.
• Analyze the design for potential security issues using a proven methodology1.
• Suggest and manage mitigations for security issues1.
• Incorporate security requirements into the design2.
• Avoid costly rework or redesign later in the SDLC2.
• Identify the most critical and relevant threats to focus on2. References: 1: Microsoft Security Development Lifecycle Threat Modelling1 2: Threat Modeling Process | OWASP Foundation2

According to the Shared Assessments CTPRP Study Guide, the business unit relationship owner is the primary point of contact for the third party and is responsible for ensuring that the third party meets the contractual obligations and service level agreements. The business unit relationship owner is also involved in the third party risk assessment process and the remediation plan approval. Therefore, a meeting should be scheduled with the business unit relationship owner before sharing the findings and remediation plans with the third party, as they have the authority and accountability to approve or reject the plans. The other options are not necessarily involved in the remediation plan approval, although they may have other roles in the third party risk management lifecycle. References:

• Shared Assessments CTPRP Study Guide, page 9, section 1.3.2
• The Third-Party Vendor Risk Management Lifecycle, section on Supplier Onboarding & Risk Monitoring
• Remediation vs. Mitigation, section on Remediation

Hybrid cloud is the cloud deployment model that is primarily used for load balancing. Load balancing is the process of distributing workloads and network traffic across multiple servers or resources to optimize performance, reliability, and scalability1. Load balancing can help prevent overloading or underutilizing any single server or resource, as well as improve fault tolerance and availability. Hybrid cloud is a mix of two or more different deployment models, such as public cloud, private cloud, or community cloud2. Hybrid cloud allows organizations to leverage the benefits of both public and private clouds, such as cost efficiency, scalability, security, and control3. Hybrid cloud can also enable load balancing across different cloud environments, depending on the demand, cost, and performance requirements of each workload. For example, an organization can use a private cloud for sensitive or mission-critical applications that require high security and performance, and a public cloud for less sensitive or variable applications that require more scalability and flexibility. By using a hybrid cloud, the organization can balance the load between the private and public clouds, and optimize the resource utilization and cost efficiency of each cloud.

The other cloud deployment models are not primarily used for load balancing, although they may have some load balancing capabilities within their own environments. Public cloud is the infrastructure that is shared by multiple tenants and open to the public. Anyone can use the public cloud by subscribing to it. Public cloud offers high scalability, elasticity, and cost-effectiveness, but may have lower security, privacy, and control than private cloud2. Community cloud is the infrastructure that is shared by similar consumers who collaborate to set up a cloud for their exclusive use. For example, government organizations can form a cloud for their exclusive use. Community cloud offers some benefits of both public and private clouds, such as shared costs, common standards, and enhanced security, but may have lower scalability and flexibility than public cloud2. Private cloud is the infrastructure that is for the exclusive use of a single organization. The cloud may or may not be operated by the organization. Private cloud offers high security, privacy, and control, but may have lower scalability, elasticity, and cost-effectiveness than public cloud2. References:

• 1: What is Load Balancing? | How Load Balancing Works | F5
• 2: The NIST Definition of Cloud Computing
• 3: What is Hybrid Cloud? | IBM
• : Hybrid Cloud Load Balancing - Kemp Technologies
• : [Hybrid Cloud Load Balancing: What You Need to Know - CloudHealth by VMware]

When calculating residual risk, the best practice for an assessor is to adjust the vendor risk rating based on the changes to the risk level after analyzing the findings and considering the effectiveness of mitigating controls. Residual risk refers to the level of risk that remains after controls are applied to mitigate the initial (inherent) risk. By evaluating the findings from a third-party assessment and factoring in the mitigating controls implemented by the vendor, the assessor can more accurately determine the remaining risk level. This adjusted risk rating provides a more realistic view of the vendor's risk profile, aiding in informed decision-making regarding risk management and vendor oversight.

References:

• The concept of residual risk calculation is discussed in risk management frameworks such as ISO 31000 (Risk Management - Guidelines), which guides the assessment and treatment of risks.
• The "Third-Party Risk Management Guide" by ISACA outlines the process of assessing and managing risks associated with third parties, including the calculation of residual risk.

The best approach to address the conflict between the vendor’s legal obligations to retain data for tax purposes and the company’s policy to require data return or destruction at contract termination is A. Determine if a policy exception and approval is required, and require that data safeguarding obligations continue after termination. This approach recognizes that the vendor may have valid reasons to retain some data for a certain period of time, and that the company may have flexibility to grant exceptions to its policy under certain circumstances. However, this approach also ensures that the company maintains oversight and control over the data that the vendor retains, and that the vendor continues to comply with the data safeguarding obligations, such as encryption, access control, audit, and breach notification, until the data is returned or destroyed. This approach balances the interests and risks of both parties, and minimizes the potential for data breaches, misuse, or loss.

The other approaches are not the best ways to address the conflict, as they may create more problems or risks for either party. B. Change the risk rating of the vendor to reflect a higher risk tier. This approach does not resolve the conflict, but rather shifts the responsibility to the company to manage the increased risk of the vendor retaining the data. Changing the risk rating may also affect the contract terms, such as pricing, service level agreements, or liability clauses, and may require renegotiation or termination of the contract. C. Insist the vendor adheres to the policy and contract provisions without exception. This approach is too rigid and may not be feasible or reasonable for the vendor, especially if they have legal obligations to retain the data. This approach may also damage the relationship and trust between the parties, and may lead to disputes or litigation. D. Conduct an assessment of the vendor’s data governance and records management program. This approach is too time-consuming and costly, and may not be necessary or relevant for the conflict. Conducting an assessment may provide some assurance about the vendor’s data practices, but it does not address the underlying issue of the conflicting data retention requirements. Moreover, conducting an assessment may not be possible or appropriate during the contract negotiation process, as it may require access to the vendor’s systems, data, or personnel. References:

• : Best Practices for Data Destruction - ed
• : CHALLENGES AND RISKS INVOLVED WITH DATA RETENTION - DataOlogie
• : Third-Party Risk Management: Final Interagency Guidance
• : Ensuring Data Protection for Third Parties: Best Practices | UpGuard Blog

A network access policy is a set of rules and conditions that define how authorized users and devices can access the network resources and services of an organization. It typically includes the following elements12:

• Firewall settings: These are the rules that control the incoming and outgoing network traffic based on the source, destination, protocol, and port of the packets. Firewall settings help to protect the network from unauthorized or malicious access, and to enforce the network security policy of the organization.
• Unauthorized device detection: This is the process of identifying and preventing unauthorized devices from accessing the network. Unauthorized devices can pose a security risk to the network, as they may not comply with the security standards and policies of the organization, or they may be compromised by malware or hackers. Unauthorized device detection can be done by using various methods, such as network access control (NAC), network admission control (NAC), or 802.1X authentication.
• Remote access: This is the ability of authorized users to access the network resources and services of the organization from a remote location, such as a home office, a hotel, or a public hotspot. Remote access can be provided by using various technologies, such as virtual private networks (VPNs), remote desktop services (RDS), or remote access services (RAS). Remote access requires a secure and reliable connection, and it must comply with the network access policy of the organization.
• Website privacy consent banners: These are the messages that appear on websites to inform the visitors about the use of cookies and other tracking technologies, and to obtain their consent for such use. Website privacy consent banners are part of the website privacy policy, which is a legal document that discloses how the website collects, uses, and protects the personal data of the visitors. Website privacy consent banners are not related to the network access policy of the organization, as they do not affect how the users and devices can access the network resources and services of the organization.

Therefore, the correct answer is C. Website privacy consent banners, as they are typically not included within the scope of an organization’s network access policy. References:

• 1: Network Policy Server (NPS) | Microsoft Learn
• 2: Network Access Policy | University Policies

 ESG programs are initiatives that aim to improve the environmental, social, and governance performance of a vendor or service provider. ESG programs may be driven by various factors, such as regulatory obligations, customer expectations, stakeholder pressure, industry standards, or company commitments. Therefore, statement B is true and the correct answer is B. Statement A is false because ESG expectations may come from external entities, such as regulators, investors, customers, or civil society. Statement C is false because ESG commitments can be measured both qualitatively and quantitatively, using indicators such as carbon emissions, diversity, ethics, or compliance. Statement D is false because ESG obligations may apply to any company, regardless of its size, ownership, or sector. References:

• Third-party risk management and the ESG agenda
• ESG third-party risk
• The Role of Third-Party Risk Management in ESG Compliance

 According to the CTPRP Job Guide, the TPRM program should establish minimum risk assessment standards for third party due diligence based on the company’s risk tolerance and risk appetite. This means that the TPRM program should define the scope, depth, frequency, and methodology of the risk assessment process for different categories of third parties, taking into account the potential impact and likelihood of various risks. The risk assessment standards should be consistent, transparent, and aligned with the company’s strategic objectives and regulatory obligations. The TPRM program should also monitor and update the risk assessment standards as needed to reflect changes in the business environment, risk profile, and best practices. The other options are not correct because they do not reflect a holistic and risk-based approach to third party due diligence. Setting the standards by each business unit may result in inconsistency, duplication, or gaps in the risk assessment process. Defining the standards in the contract or statement of work may limit the flexibility and adaptability of the risk assessment process to changing circumstances. Identifying the standards by procurement may overlook the input and involvement of other stakeholders and functions in the risk assessment process. References:

• CTPRP Job Guide, page 17
• Third-Party Risk Management and ISO Requirements for 2022, section “Benefits of Implementing Risk Management”
• Managing third-party risk through effective due diligence, section “Complying with regulators’ demands”
• Third-Party Due Diligence Checklist: 3 Essential Steps, section “Step 2: Conduct a Risk Assessment”

An Information Security Incident Management Program is a set of policies, procedures, and tools that enable an organization to prevent, detect, respond to, and recover from information security incidents. An information security incident is any event that compromises the confidentiality, integrity, or availability of information assets, systems, or services12. A formal Information Security Incident Management Program typically includes the following components12:

• The definition of internal escalation processes: This component defines the roles and responsibilities, communication channels, and reporting mechanisms for escalating and managing information security incidents within the organization. It also establishes the criteria and thresholds for determining the severity and impact of incidents, and the appropriate level of response and escalation.
• The protocols for disclosure of information to external parties: This component defines the rules and guidelines for disclosing information about information security incidents to external stakeholders, such as customers, regulators, law enforcement, media, or other third parties. It also specifies the legal and contractual obligations, the timing and frequency, the format and content, and the approval and authorization processes for disclosure.
• The mechanisms for notification to clients: This component defines the methods and procedures for notifying clients or customers who may be affected by information security incidents. It also specifies the objectives, scope, and content of notification, as well as the timing and frequency, the delivery channels, and the feedback and follow-up mechanisms.
• The processes in support of disaster recovery: This component defines the steps and actions for restoring the normal operations of the organization after a major information security incident that causes significant disruption or damage to the information assets, systems, or services. It also specifies the roles and responsibilities, the resources and tools, the backup and recovery plans, and the testing and validation procedures for disaster recovery.

The statement that reflects a requirement that is NOT typically found in a formal Information Security Incident Management Program is D. The program includes processes in support of disaster recovery. While disaster recovery is an important aspect of information security, it is not a specific component of an Information Security Incident Management Program. Rather, it is a separate program that covers the broader scope of business continuity and resilience, and may involve other types of disasters besides information security incidents, such as natural disasters, power outages, or pandemics3 . Therefore, the correct answer is D. The program includes processes in support of disaster recovery. References: 1: Computer Security Incident Handling Guide 2: Develop and Implement a Security Incident Management Program 3: Business Continuity Management vs Disaster Recovery : What is the difference between disaster recovery and security incident response?

A well-defined third party risk management program does not require conducting onsite or virtual assessments for all third parties, as this would be impractical, costly, and inefficient. Instead, a TPRM program should adopt a risk-based approach to determine the frequency, scope, and depth of assessments based on the inherent and residual risks posed by each third party. This means that some third parties may require more frequent and comprehensive assessments than others, depending on factors such as the nature, scope, and criticality of their services, the sensitivity and volume of data they access or process, the regulatory and contractual obligations they must comply with, and the results of previous assessments and monitoring activities. A risk-based approach to assessments allows an organization to allocate its resources and efforts more effectively and efficiently, while also ensuring that the most significant risks are adequately addressed and mitigated. References:

• Shared Assessments, CTPRP Job Guide, page 9: “The frequency, scope, and depth of assessments should be determined by the inherent and residual risks posed by each third party.”
• OneTrust, [What is Third-Party Risk Management?]: “A risk-based approach to third-party risk management means that you prioritize your efforts and resources based on the level of risk each vendor poses to your organization.”
• [Deloitte], [Third Party Risk Management: Managing Risk]: “A risk-based approach to third-party risk management helps organizations prioritize their efforts and resources based on the level of risk each third party poses to the organization.”

The most important next step after receiving a vendor questionnaire is to analyze the responses and identify any gaps, issues, or risks that may pose a threat to the organization or its customers. This analysis should be based on the inherent risk profile of the vendor, the criticality of the service or product they provide, and the applicable regulatory and contractual requirements. The analysis should also highlight any adverse or high priority responses that indicate a lack of adequate controls, policies, or procedures on the vendor’s part. These responses should be prioritized for further validation, testing, or remediation. The analysis should also document any assumptions, limitations, or dependencies that may affect the accuracy or completeness of the vendor’s responses. References:

• Shared Assessments CTPRP Study Guide, Section 4.2.2, page 43
• Third-Party Risk Management: Managing Risk, Section “Assessing and monitoring third-party risk”
• What Is Third-Party Risk Management (TPRM)? 2024 Guide, Section “Third-Party Risk Management Process”

The onboarding process for new hires is a key part of the third-party risk management program, as it ensures that the right people are hired and trained to perform their roles effectively and securely. One of the best practices for onboarding new hires is to conduct applicant screening, which may include background checks, reference checks, verification of credentials, and assessment of skills and competencies. Applicant screening helps to identify and mitigate potential risks such as fraud, theft, corruption, or data breaches that may arise from hiring unqualified, dishonest, or malicious individuals. Therefore, it is important to wait for the results of applicant screening before onboarding new employees and contractors, as this can prevent costly and damaging incidents in the future.

The other statements are false regarding the onboarding process for new hires. It is necessary to have employees, contractors, and third-party users sign confidentiality or non-disclosure agreements, as this protects the company’s sensitive information and intellectual property from unauthorized disclosure or misuse. Non-compete agreements may not be required for all job roles, as they may limit the employee’s ability to work for other companies or in the same industry after leaving the current employer. They may also be subject to legal challenges depending on the jurisdiction and the scope of the agreement. Security and privacy awareness training is essential for all new employees and contractors, regardless of their existing certifications, as it educates them on the company’s policies, procedures, and standards for protecting data and systems from cyber threats. It also helps to foster a culture of security and compliance within the organization. References:

• 5 Steps to Effective Third-Party Onboarding
• Using a third-party onboarding tool to address new challenges in third-party risk
• Onboarding and terminating third parties
• CTPRP Job Guide

TPRM vendor classification is the process of categorizing vendors based on their criticality, risk level, and service type. Vendor classification helps to prioritize and allocate resources for vendor assessment, monitoring, and remediation. Vendor classification should be updated periodically to reflect changes in the business environment, vendor performance, and regulatory requirements.

When updating TPRM vendor classification requirements with a focus on availability, the risk rating factors that provide the greatest impact to the analysis are the impact on operations and end users, the impact on revenue, and the impact on regulatory compliance. This is because:

• Availability is the degree to which a system or service is accessible and functional when required by authorized users. Availability is a key component of information security and business continuity, as it ensures that the business can operate normally and deliver value to its customers and stakeholders.
• Impact on operations and end users measures the extent to which a vendor’s service disruption or failure affects the business processes, functions, and activities that depend on the vendor’s service. A high impact on operations and end users means that the vendor’s service is essential for the business to perform its core functions and meet its objectives, and that any downtime or degradation of the service would cause significant operational delays, inefficiencies, or losses.
• Impact on revenue measures the extent to which a vendor’s service disruption or failure affects the business’s income, profitability, and market share. A high impact on revenue means that the vendor’s service is directly or indirectly linked to the business’s revenue generation, and that any downtime or degradation of the service would cause substantial financial losses, reduced customer satisfaction, or competitive disadvantage.
• Impact on regulatory compliance measures the extent to which a vendor’s service disruption or failure affects the business’s adherence to the laws, regulations, standards, and contractual obligations that govern its industry, sector, or jurisdiction. A high impact on regulatory compliance means that the vendor’s service is subject to strict regulatory requirements, and that any downtime or degradation of the service would cause serious legal penalties, fines, sanctions, or reputational damage.

Therefore, these three factors are the most important to consider when updating TPRM vendor classification requirements with a focus on availability, as they reflect the potential consequences and risks of vendor unavailability for the business.

References:

• CTPRP Job Guide
• Criticality and Risk Rating Vendors 101
• The Third-Party Vendor Risk Management Lifecycle
• What Is Third-Party Risk Management (TPRM)? 2024 Guide
• Third-Party Risk Management and ISO Requirements for 2022

 Criticality is a measure of how essential a service provider is to the organization’s core business functions and objectives. It reflects the potential consequences of a service disruption or failure on the organization’s operations, reputation, compliance, and financial performance. Criticality is not the same as risk, which is the likelihood and severity of a negative event occurring. Criticality helps to prioritize the risk assessment and mitigation efforts for different service providers based on their relative importance to the organization. Criticality is not limited to a specific type of service, such as disaster recovery or personal information, nor is it determined by the mode of access or connectivity. Criticality is assigned to the service providers that have the greatest impact on the organization’s ability to deliver its products or services to its customers and stakeholders in a timely and satisfactory manner. References:

• Shared Assessments. (2020). Certified Third Party Risk Professional (CTPRP) Study Guide1
• Milliman. (2017). Defining “critical or important functions or activities” for outsourcing purposes2
• Webster, C. and Sundaram, D.S. (2009). Effect of service provider’s communication style on customer satisfaction in professional services setting: the moderating role of criticality and service nature. Journal of Services Marketing, 23(2), 103-1131

Due diligence is the process of evaluating the risks and opportunities associated with a potential or existing third-party vendor. Due diligence can vary in scope and depth depending on the level of risk that the vendor poses to the organization. Lower risk vendors are those that have minimal impact on the organization’s operations, reputation, or compliance, and that do not handle sensitive or confidential data or systems. For lower risk vendors, conducting due diligence may involve accepting the service provider’s self-assessment questionnaire responses as sufficient evidence of their capabilities, performance, and compliance. A self-assessment questionnaire is a tool that allows the vendor to provide information about their organization, services, processes, controls, and policies. The organization can use the questionnaire to verify the vendor’s identity, qualifications, references, and certifications, and to assess the vendor’s alignment with the organization’s standards and expectations. Accepting the vendor’s self-assessment questionnaire responses as the primary source of due diligence can save time and resources for the organization, and can also demonstrate trust and confidence in the vendor. However, the organization should also ensure that the questionnaire is comprehensive, relevant, and updated, and that the vendor’s responses are accurate, complete, and consistent. The organization should also reserve the right to request additional information or documentation from the vendor if needed, and to conduct periodic reviews or audits of the vendor’s performance and compliance.

The other options do not best describe conducting due diligence of a lower risk vendor, because they either involve more extensive or rigorous methods of due diligence, or they are not directly related to due diligence. Preparing reports to management regarding the status of third party risk management and remediation activities is an important part of monitoring and managing the vendor relationship, but it is not a due diligence activity per se. Reviewing a service provider’s self-assessment questionnaire and external audit report(s) is a more thorough way of conducting due diligence, but it may not be necessary or feasible for lower risk vendors, especially if the external audit report(s) are not readily available or relevant. Requesting and filing a service provider’s external audit report(s) for future reference is a good practice for maintaining documentation and evidence of due diligence, but it is not a due diligence activity itself.

References:

• Third Party Risk Management (TPRM) | Shared Assessments
• Vendor Due Diligence Strategy Guide and Checklist | Prevalent
• Vendor due diligence: a practical guide and checklist

According to the Shared Assessments Certified Third Party Risk Professional (CTPRP) Study Guide, the third party risk assessor’s role is to evaluate the design and operating effectiveness of the third party’s controls based on an industry framework, such as ISO, NIST, COBIT, or COSO1. The assessor’s role is not to provide an opinion on the effectiveness of controls, but rather to report the results of the evaluation in a factual and objective manner2. The assessor’s role is also to conduct discovery with subject matter experts to understand the control environment, to conduct discovery and validate responses from the risk assessment questionnaire by testing or validating controls, and to review compliance artifacts and identify potential control gaps based on evaluation of the presence of control attributes1. These are all true statements that describe the assessor’s role when conducting a controls evaluation using an industry framework.

References:

• 1: Shared Assessments Certified Third Party Risk Professional (CTPRP) Study Guide, page 29
• 2: What is a Third-Party Risk Assessment? — RiskOptics

A Business Impact Analysis (BIA) is a process of determining the criticality of business activities and associated resource requirements to ensure operational resilience and continuity of operations during and after a business disruption1. A BIA is used to identify the potential impacts of disruptions on business processes, such as lost sales, delayed revenue, increased expenses, regulatory fines, or contractual penalties2. A BIA is not concerned with the probability or causes of disruptions, but rather with the effects and consequences of disruptions3. Therefore, a BIA typically does not include requiring vendor participation in testing, as this is a part of the business continuity and disaster recovery planning and implementation, not the impact analysis. Vendor participation in testing is important to validate the effectiveness and alignment of the vendor’s business continuity and disaster recovery plans with the organization’s objectives and expectations, but it is not a component of the BIA itself. References: 1: Using Business Impact Analysis to Inform Risk Prioritization and Response 2: Business Impact Analysis (BIA): Prepare for Anything [2024] • Asana 3: The Difference Between a Vendor’s BIA and Risk Analysis - Venminder : Best Practices Guidance for Third Party Risk

Shadow IT is the use and management of any IT technologies, solutions, services, projects, and infrastructure without formal approval and support of internal IT departments. Shadow IT can pose significant security risks to the organization, such as data breaches, compliance violations, malware infections, or network disruptions. Therefore, assessing and mitigating the risk of shadow IT is an essential part of organizational security.

One of the most important factors when assessing the risk of shadow IT is whether the organization maintains adequate policies and procedures that communicate required controls for security functions. Policies and procedures are the documents that define the organization’s security objectives, standards, roles, responsibilities, and processes. They provide guidance and direction for the organization’s security activities, such as risk assessment, vendor management, incident response, data protection, access control, etc. They also establish the expectations and requirements for the organization’s employees, vendors, and other stakeholders regarding the use and management of IT resources.

By maintaining adequate policies and procedures that communicate required controls for security functions, the organization can:

• Educate and inform its employees about the security risks and implications of shadow IT, and the benefits and advantages of using authorized and supported IT resources.
• Establish and enforce clear and consistent rules and boundaries for the use and management of IT resources, and the consequences and penalties for violating them.
• Monitor and audit the compliance and performance of its employees, vendors, and other stakeholders regarding the use and management of IT resources, and identify and address any deviations or issues.
• Review and update its policies and procedures regularly, and communicate any changes or updates to its employees, vendors, and other stakeholders.

By doing so, the organization can reduce the likelihood and impact of shadow IT, and increase the visibility and accountability of its IT environment. The organization can also foster a culture of security awareness and responsibility among its employees, vendors, and other stakeholders, and encourage them to report and resolve any shadow IT incidents or problems.

The other factors, such as the organization’s security training and certification, staffing levels, and resources and investment, are also relevant for assessing the risk of shadow IT, but they are not as important as the organization’s policies and procedures. Security training and certification can help the organization’s security personnel to acquire and maintain the necessary skills and knowledge to deal with shadow IT, but they do not address the root causes or motivations of shadow IT. Staffing levels can affect the organization’s ability to detect and respond to shadow IT, but they do not prevent or deter shadow IT from occurring. Resources and investment can enable the organization to provide adequate and appropriate IT resources to its employees, vendors, and other stakeholders, but they do not guarantee the satisfaction or compliance of those parties. References:

• : Shadow IT Explained: Risks & Opportunities - BMC Software
• : What is Shadow IT? | IBM
• : Shadow IT: What Are the Risks and How Can You Mitigate Them? - Ekran System
• : Policies and Procedures - Shared Assessments