Pass the Shared Assessments Third Party Risk Management CTPRP Questions and answers with ExamsMirror

The primary objective of a third party risk assessment is to validate that the vendor/service provider has adequate controls in place based on the organization’s risk posture. A third party risk assessment (also known as supplier risk assessment) quantifies the risks associated with third-party vendors and suppliers that provide products or services to your organization1. This assessment is useful for analyzing both new and ongoing supplier relationships. The growing risk of supply chain attacks makes it critical to conduct thorough and regular risk assessments of your third parties. A third party risk assessment helps you identify, measure, and mitigate the potential risks that your third parties pose to your organization, such as data breaches, cyberattacks, compliance violations, operational disruptions, reputational damage, or financial losses. A third party risk assessment also helps you align your third party risk management (TPRM) program with your organization’s risk appetite, policies, standards, and procedures. A third party risk assessment typically involves the following steps1:

Scoping: Define the scope of the assessment based on the type, nature, and criticality of the third party relationship. Determine the relevant risk domains, such as security, privacy, compliance, business continuity, etc.

Data collection: Gather information from the third party using various methods, such as questionnaires, surveys, interviews, audits, tests, or evidence reviews.

Analysis: Analyze the data collected and compare it with your organization’s risk criteria, benchmarks, and best practices. Identify any gaps, weaknesses, or issues in the third party’s controls, processes, or performance.

Reporting: Document the findings and recommendations of the assessment in a clear and concise report. Communicate the results to the relevant stakeholders, such as senior management, business owners, or regulators.

Remediation: Follow up with the third party to ensure that they implement the necessary actions to address the identified risks. Monitor and track the progress and effectiveness of the remediation plan.

Review: Review and update the assessment periodically or whenever there are significant changes in the third party relationship, the risk environment, or the regulatory requirements.

The other statements are not the primary objective of a third party risk assessment, although they may be related or secondary objectives. Assessing the appropriateness of non-disclosure agreements regarding the organization’s systems/data is a legal objective that may be part of the contract negotiation or review process. Determining the scope of the business relationship is a strategic objective that may be part of the vendor selection or due diligence process. Evaluating the risk posture of all vendors/service providers in the vendor inventory is a holistic objective that may be part of the vendor risk management or governance process. References:

1: Third-Party Risk Assessment: A Practical Guide - BlueVoyant

: What Is Third-Party Risk Management (TPRM)? 2024 Guide | UpGuard

: What is Third-Party Risk Management? | Blog | OneTrust

A Zero Trust approach to access management is based on the principle of verifying every access request as if it originates from an open network, regardless of the source, destination, or context. This means that no implicit trust is granted based on network location, user identity, or device status. Instead, every access request is evaluated based on multiple factors, such as user credentials, device health, data sensitivity, and threat intelligence. A Zero Trust approach also requires that all communication is encrypted and protected, and that access is granted on a per session basis with the least privilege principle123.

Utilizing a solution that allows direct access by third parties to the organization’s network does not reflect a Zero Trust approach, because it implies that the network perimeter is a reliable boundary for security and trust. This assumption is risky, because it exposes the organization to potential breaches and attacks from compromised or malicious third parties, who may have access to sensitive data and resources without proper verification or protection. A Zero Trust approach would require that third parties use secure and isolated channels to access the organization’s network, such as VPNs, proxies, or gateways, and that their access is monitored and controlled based on granular policies and conditions123. References:

Zero Trust part 1: Identity and access management

Zero Trust Model - Modern Security Architecture | Microsoft Security

Zero Trust identity and access management development best practices …

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

 Security vulnerabilities and security defects are not synonymous, but rather different concepts that relate to the security of software products or services. A security vulnerability is a weakness or flaw in the software that can be exploited by an attacker to compromise the confidentiality, integrity, or availability of the system or data12. A security defect is a mistake or error in the software code that causes the software to behave in an unexpected or incorrect way34. A security defect may or may not lead to a security vulnerability, depending on the context and impact of the defect. For example, a security defect that causes a buffer overflow may result in a security vulnerability that allows an attacker to execute arbitrary code on the system. However, a security defect that causes a spelling error in the user interface may not pose a security risk at all.

Security vulnerabilities and security defects have different causes, consequences, and solutions. Security vulnerabilities are often caused by design flaws, logic errors, or insufficient security controls in the software12. Security defects are often caused by poor coding practices, lack of testing, or human mistakes in the software development process34. Security vulnerabilities can have severe consequences for the software users, providers, and stakeholders, such as data breaches, identity theft, fraud, or sabotage12. Security defects can have various consequences for the software functionality, performance, or usability, such as crashes, glitches, or bugs34. Security vulnerabilities require proactive and reactive measures to prevent, detect, and mitigate the potential attacks, such as security testing, patching, monitoring, and incident response12. Security defects require corrective and preventive measures to identify, resolve, and avoid the errors, such as code review, debugging, refactoring, and quality assurance34.

Therefore, the statement that security vulnerabilities and security defects are synonymous is FALSE. They are distinct but related aspects of software security that require different approaches and techniques to address them. References: 1: What is a Software Vulnerability? | Veracode 2: Software Security: differences between vulnerabilities and Defects 3: What is a Software Defect? - Definition from Techopedia 4: Are vulnerabilities discovered and resolved like other defects? - Springer

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

Physical access procedures and activity logs are important components of third-party risk management, as they help to ensure the security and integrity of the physical assets and data of the organization and its third parties. However, requiring physical access logs to be retained indefinitely for audit purposes is not a best practice, as it may pose legal, regulatory, and operational challenges. According to the Supplemental Examination Procedures for Risk Management of Third-Party Relationships, physical access logs should be retained for a reasonable period of time, consistent with the organization’s policies and procedures, and in compliance with applicable laws and regulations1. Retaining physical access logs indefinitely may increase the risk of unauthorized access, data breaches, privacy violations, and litigation2. Therefore, the statement B is the correct answer, as it is the only one that does not reflect a best practice for physical access procedures and activity logs.

References:

1: How to Write Third-Party Risk Management (TPRM) Policies and Procedures - SecurityScorecard Blog

2: Five Best Practices to Manage and Control Third-Party Risk - Broadcom Inc.

3: A checklist for third-party risk management platforms - Crowe LLP

4: Supplemental Examination Procedures for Risk Management of Third-Party Relationships

5: Third Party Risk Management: Why It’s Important And What Features To Look For - Expert Insights

Risk registers are tools that help organizations document, monitor, and manage their third party risks. They typically include information such as the risk description, category, source, impact, likelihood, rating, owner, status, and action plan. Risk registers enable organizations to prioritize their risks, assign responsibilities, track progress, and report on their risk posture. According to the CTPRP Study Guide, "A risk register is a tool for capturing and managing risks throughout the third-party lifecycle. It provides a comprehensive view of the organization’s third-party risk profile and facilitates risk reporting and communication."1 Similarly, the GARP Best Practices Guidance for Third-Party Risk states, "A risk register is a tool that records and tracks the risks associated with third parties. It helps to identify, assess, and prioritize risks, as well as to assign ownership, mitigation actions, and target dates."2

References:

CTPRP Study Guide

GARP Best Practices Guidance for Third-Party Risk

While whistleblower compliance issue reporting mechanisms are important for ensuring ethical conduct and accountability within an organization, they are not directly related to the security and privacy awareness of the service provider’s employees and contractors. The other topics are more relevant for assessing the service provider’s ability to protect the organization’s sensitive data and systems from external and internal threats, such as phishing, social engineering, unauthorized access, data breaches, etc. Therefore, B is the least important topic when evaluating a service provider’s Security and Privacy Awareness Program. References:

Shared Assessments CTPRP Study Guide, page 43, section 4.2.3: Security and Privacy Awareness Program

Third-Party Security: 8 Steps To Assessing Risks And Protecting Your Ecosystem, step 4: Evaluate the vendor’s security awareness and training program

What Is Third-Party Risk Management, section: How to Implement a Third-Party Risk Management Program, bullet point: Security and privacy awareness training

Controls evaluation is the process of verifying and validating the effectiveness of the controls implemented by the third party to mitigate the identified risks. It involves reviewing the evidence provided by the third party, such as policies, procedures, certifications, attestations, or test results, to determine if the controls are adequate, consistent, and compliant with the requirements and standards of the organization. Controls evaluation also involves analyzing the assessment results to identify any gaps, weaknesses, or issues in the third party’s controls, and reporting the findings and recommendations to the relevant stakeholders. Negotiating contract terms for the right to audit is not a component of controls evaluation, but rather a component of contract management. Contract management is the process of establishing, maintaining, and enforcing the contractual agreements between the organization and the third party. It involves defining the roles, responsibilities, expectations, and obligations of both parties, as well as the terms and conditions for service delivery, performance measurement, risk management, dispute resolution, and termination. Negotiating contract terms for the right to audit is a key aspect of contract management, as it allows the organization to monitor and verify the third party’s compliance with the contract and the applicable regulations and standards. It also enables the organization to conduct independent audits or assessments of the third party’s controls, processes, and performance, and to request remediation actions if necessary. References:

1: Shared Assessments, a leading provider of third party risk management solutions, offers a comprehensive guide for Certified Third Party Risk Professional (CTPRP) candidates, which covers the core concepts and best practices of third party risk management, including controls evaluation and contract management.

2: UpGuard, a platform for cybersecurity and third party risk management, provides a detailed overview of the best practices for third party risk assessment, which includes the steps and criteria for evaluating the controls of third parties.

3: Deloitte, a global professional services firm, offers an end-to-end managed service for third party risk management, which includes controls evaluation and contract management as key components of the service.

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.