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

Third-party risk management (TPRM) is the process of identifying, assessing, and mitigating the risks associated with outsourcing business activities or functions to external entities. TPRM is influenced by various regulations that aim to protect the interests of customers, stakeholders, and regulators from the potential harm caused by third-party failures or misconduct. These regulations may vary depending on the industry, jurisdiction, and nature of the third-party relationship. Therefore, it is important for organizations to update their inventory of regulations that impact their TPRM program during their annual risk assessment, and prioritize the regulations that are most relevant and critical for their business objectives and risk appetite.

The optimal approach to prioritizing the regulations is to identify the applicable regulations that require an extension of specific obligations to service providers. This means that the organization should focus on the regulations that impose certain requirements or expectations on the organization and its third-party partners, such as data protection, security, compliance, reporting, auditing, or performance standards. These regulations may also specify the roles and responsibilities of the organization and the service provider, the scope and frequency of due diligence and monitoring activities, the contractual clauses and terms, and the remediation and termination procedures. By identifying these regulations, the organization can ensure that its TPRM program is aligned with the regulatory expectations and obligations, and that it can effectively manage and mitigate the risks associated with its third-party relationships.

Some examples of regulations that require an extension of specific obligations to service providers are:

The General Data Protection Regulation (GDPR): This is a European Union regulation that governs the collection, processing, and transfer of personal data of individuals in the EU. The GDPR requires organizations to implement appropriate technical and organizational measures to protect the personal data, and to only engage with service providers that can provide sufficient guarantees of data protection. The GDPR also requires organizations to enter into written contracts with their service providers that specify the subject matter, duration, nature, and purpose of the data processing, as well as the rights and obligations of both parties. The GDPR also imposes strict notification and reporting requirements in case of data breaches or violations.

The Health Insurance Portability and Accountability Act (HIPAA): This is a US federal law that regulates the privacy and security of health information of individuals. The HIPAA requires covered entities, such as health care providers, health plans, and health care clearinghouses, to safeguard the health information of their patients, and to only disclose or share it with authorized parties. The HIPAA also requires covered entities to enter into business associate agreements with their service providers that handle or access the health information on their behalf. These agreements must specify the permitted and required uses and disclosures of the health information, the safeguards and measures to protect the health information, and the reporting and notification obligations in case of breaches or incidents.

The Sarbanes-Oxley Act (SOX): This is a US federal law that aims to improve the accuracy and reliability of corporate financial reporting and disclosure. The SOX requires public companies to establish and maintain internal controls over their financial reporting processes, and to assess and report on the effectiveness of these controls. The SOX also requires public companies to ensure that their external auditors are independent and qualified, and to disclose any material weaknesses or deficiencies in their internal controls. The SOX also applies to the service providers that perform or support the financial reporting functions of the public companies, such as accounting firms, information technology vendors, or consultants. The SOX requires public companies to evaluate and monitor the internal controls of their service providers, and to include them in their scope of audit and reporting.

References:

Third-Party Risk Management and Mitigation | Gartner

Best Practices to Jumpstart Third-Party Risk Management Program

Third-party risk management best practices and why they matter

GDPR and Third-Party Risk Management

HIPAA Compliance for Business Associates and Third-Party Service Providers

SOX Compliance Requirements for Third-Party Service Providers

Terms for return or destruction of data should be defined and agreed upon during contract negotiation, as this is the phase where the organization and the third party establish the expectations, obligations, and responsibilities for the relationship, including the handling of data. According to the Shared Assessments CTPRP Study Guide, contract negotiation is the phase where "the organization and the third party negotiate and execute a contract that clearly defines the expectations and responsibilities of both parties, including the scope of work, service level agreements, performance measures, reporting requirements, compliance obligations, security and privacy controls, incident response procedures, dispute resolution mechanisms, termination rights, and other relevant terms and conditions."1 One of the key contractual terms that should be addressed is the return or destruction of data, which specifies how the third party will return or dispose of the organization’s data at the end of the relationship, or upon request, in a secure and timely manner. This term is important for ensuring the organization’s data protection, confidentiality, and compliance, as well as reducing the risk of data breaches, leaks, or misuse by the third party or unauthorized parties.

The other phases of the TPRM lifecycle are not the best choices for defining and agreeing upon terms for return or destruction of data, because:

B. At third party selection and initial due diligence: This is the phase where the organization identifies, evaluates, and selects the third party that best meets its needs, objectives, and risk appetite. This phase involves conducting due diligence on the third party’s capabilities, qualifications, reputation, performance, security, and compliance, as well as assessing the inherent risk of the relationship. While this phase is important for screening and choosing the right third party, it does not involve defining and agreeing upon the specific terms and conditions of the relationship, such as the return or destruction of data, which are usually done in the contract negotiation phase.

C. When deploying ongoing monitoring: This is the phase where the organization monitors and reviews the third party’s performance, service delivery, risk management, and compliance on a regular basis, as well as identifies and addresses any issues, gaps, or changes that may arise during the relationship. This phase involves collecting and analyzing data and information from various sources, such as reports, audits, assessments, surveys, feedback, incidents, and metrics, as well as communicating and collaborating with the third party to ensure alignment and improvement. While this phase is important for ensuring the quality and security of the relationship, it does not involve defining and agreeing upon the terms and conditions of the relationship, such as the return or destruction of data, which are usually done in the contract negotiation phase.

D. At termination and exit: This is the phase where the organization terminates and exits the relationship with the third party, either by mutual agreement, expiration of contract, breach of contract, or other reasons. This phase involves executing the termination and exit plan, which may include notifying the third party, transferring or discontinuing the services, settling the financial obligations, returning or destroying the data, revoking the access rights, and conducting a post-termination review. While this phase is important for ensuring a smooth and secure transition and closure of the relationship, it does not involve defining and agreeing upon the terms and conditions of the relationship, such as the return or destruction of data, which are usually done in the contract negotiation phase.

References:

1: Shared Assessments CTPRP Study Guide, page 59, section 5.1: TPRM Lifecycle

: Third-Party Risk Management: Vendor Contract Terms and Conditions, section: Data Ownership, Return and Destruction

: [Third-Party Risk Management: The 3rd Party Ecosystem: How to Manage the Risk While Keeping the Benefit], section: Contract Negotiation

: [Third-Party Risk Management: The 3rd Party Ecosystem: How to Manage the Risk While Keeping the Benefit], section: Termination and Exit

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.

Changes to administrator access are typically not subject to the traditional change control process, as they often pertain to user access management rather than modifications to the production environment's infrastructure or applications. Administrator access changes involve granting, altering, or revoking administrative privileges to systems, which is managed through access control policies and procedures rather than through change control. Change control processes are primarily concerned with changes to the network, systems, and applications that could affect the production environment's stability, security, and functionality. In contrast, managing administrative access is part of identity and access management (IAM), which focuses on ensuring that only authorized individuals have access to specific levels of information and system functionality.

References:

Access control and identity management best practices, such as those outlined in NIST SP 800-53 (Security and Privacy Controls for Federal Information Systems and Organizations), emphasize the separation of duties and least privilege principles, which guide the management of administrator access changes.

Resources like "Access Control Systems and Methodology" from ISC²'s CISSP Common Body of Knowledge provide guidelines on effectively managing access to prevent unauthorized access and maintain system security.

Vendor classification or risk tiering is a process of categorizing vendors based on the level of security risk they introduce to an organization12. It is a key component of a third-party risk management (TPRM) program, as it helps to prioritize and allocate resources for vendor assessment, monitoring, and remediation12. The statement D is true, as it reflects the first step of vendor classification or risk tiering, which is to determine the inherent risk of each vendor relationship based on the nature, scope, and complexity of the product or service being outsourced3 . Inherent risk is the risk that exists before any controls or mitigating factors are applied3 . By calculating the inherent risk, an organization can assign each vendor to a risk tier that reflects the potential impact and likelihood of a security breach or incident involving the vendor3 .

The other statements are false, as they do not accurately describe the vendor classification or risk tiering process. The statement A is false, as vendor classification and risk tiers are not based on residual risk calculations, but on inherent risk calculations. Residual risk is the risk that remains after controls or mitigating factors are applied3 . Residual risk is used to evaluate the effectiveness of the controls and the need for further action, but not to classify or tier vendors3 . The statement B is false, as vendor classification and risk tiering should be used for all third party relationships, not only for critical ones. Vendor classification and risk tiering helps to identify and prioritize the critical vendors, but also to manage the low and medium risk vendors according to their respective risk profiles12. The statement C is false, as vendor classification and corresponding risk tiers do not utilize the same due diligence standards for controls evaluation based upon policy, but different ones. Due diligence standards are the criteria and methods used to assess the security posture and performance of vendors. Due diligence standards should vary according to the risk tier of the vendor, as higher risk vendors require more rigorous and frequent evaluation than lower risk vendors.

References:

1: What is Vendor Tiering? Optimize Your Vendor Risk Management | UpGuard Blog

2: Vendor Tiering Best Practices: Categorizing Vendor Risks | UpGuard Blog

3: Third-Party Risk Management (TPRM): A Complete Guide - BlueVoyant

[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

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

According to the Shared Assessments Certified Third Party Risk Professional (CTPRP) Study Guide, data loss prevention (DLP) is a strategy for preventing the unauthorized disclosure, transfer, or misuse of sensitive data, such as personally identifiable information (PII), personal health information (PHI), or intellectual property (IP)1. Endpoint security is a component of DLP that focuses on protecting the devices (such as laptops, tablets, or smartphones) that access and store sensitive data from internal or external threats2. Therefore, data loss prevention in endpoint security is the strategy for preventing exfiltration of confidential information by users who access company systems, as this could result in data breaches, regulatory fines, reputational damage, or competitive disadvantage3.

The other options are not the best descriptions of data loss prevention in endpoint security, as they either relate to different aspects of data protection or security, or do not address the specific goal of preventing data exfiltration. Data backups are a strategy for ensuring data recovery in the event of a disaster, but they do not prevent data loss or leakage from unauthorized access or transfer. High-availability is a strategy for ensuring data availability and continuity, but it does not prevent data loss or leakage from malicious or accidental actions. Malware prevention is a strategy for ensuring data integrity and confidentiality, but it does not prevent data loss or leakage from legitimate users who may misuse or overshare data.

References:

1: Shared Assessments Certified Third Party Risk Professional (CTPRP) Study Guide, page 25

2: What is Endpoint Security? | McAfee

3: What is data loss prevention (DLP)? | Microsoft Security

[4]: Data Backup vs. Data Recovery: What’s the Difference? | Carbonite

[5]: What is High Availability? | IBM

[6]: What is Malware? | Norton

Change management is the process of controlling and documenting any changes to the scope, objectives, requirements, deliverables, or resources of a project or a program. Change management ensures that the impact of any change is assessed and communicated to all stakeholders, and that the changes are implemented in a controlled and coordinated manner. Compliance artifacts are the documents, records, or reports that demonstrate the adherence to the change management process and the regulatory or industry standards.

A robust change management process should include the following attributes:

Logging: This means that any change request or proposal is recorded in a change log or a change register, along with the details of the change initiator, the change description, the change category, the change priority, the change status, and the change history. Logging helps to track and monitor the progress and outcome of each change, and to provide an audit trail for compliance purposes.

Approvals: This means that any change request or proposal is reviewed and approved by the appropriate authority or stakeholder, such as the project manager, the sponsor, the customer, the steering committee, or the regulatory body. Approvals help to ensure that the change is justified, feasible, aligned with the project or program objectives, and acceptable to the affected parties.

Validation: This means that any change request or proposal is verified and tested to ensure that it meets the quality standards, the functional and non-functional requirements, and the expected benefits and outcomes. Validation helps to ensure that the change is implemented correctly, effectively, and efficiently, and that it does not introduce any errors, defects, or risks.

Back-out and exception procedures: This means that any change request or proposal has a contingency plan or a rollback plan in case the change fails, causes problems, or is rejected. Back-out and exception procedures help to minimize the negative impact of the change, and to restore the original state or the baseline of the project or program. They also help to handle any deviations or issues that may arise during the change implementation or the change review.

References:

CTPRP Job Guide

An Agile Approach to Change Management

CM Overview

Management Artifacts and its Types

Achieving Regulatory and Industry Standards Compliance with the Scaled Agile Framework

8 Steps for an Effective Change Management Process

 it is the most appropriate and compliant method of validating pre-employment screening attributes among the given options. Requesting evidence of the performance of pre-employment screening when permitted by law means that the organization respects the legal and regulatory boundaries of different jurisdictions and does not impose unnecessary or unlawful requirements on its third parties. It also ensures that the organization obtains relevant and reliable information about the third parties’ screening processes and outcomes, which can help assess their suitability and risk level.

The other options are incorrect because they are either inappropriate or ineffective methods of validating pre-employment screening attributes. Reviewing evidence of web search of social media sites (A) is inappropriate because it may violate the privacy and data protection rights of the third parties and their employees, as well as expose the organization to potential bias and discrimination claims. Providing and sampling complete personnel files to demonstrate unique screening results (B) is ineffective because it may not reflect the actual screening attributes of the third parties, as they may have different screening criteria, standards, and methods than the organization. Requiring evidence of drug testing © is inappropriate because it may not be relevant or necessary for the nature and scope of the third-party relationship, and it may also conflict with the laws and regulations of different jurisdictions that prohibit or limit such testing. References:

https://www.onetrust.com/blog/third-party-risk-management/

The Cardholder Data Environment (CDE) is the part of the network that stores, processes, or transmits cardholder data or sensitive authentication data, as well as any connected or security-impacting systems123. The CDE is subject to the Payment Card Industry Data Security Standard (PCI DSS), which is a set of requirements and guidelines for ensuring the security and compliance of payment card transactions123. The PCI DSS defines various artifacts that are reviewed when assessing the CDE, such as:

The Data Security Standards (DSS) framework: This is the document that specifies the 12 high-level requirements and the corresponding sub-requirements and testing procedures for PCI DSS compliance123. The DSS framework should be used to scope the assessment, meaning to identify and document the systems and components that are in scope for PCI DSS, as well as the applicable requirements and controls for each system and component123. Therefore, option A is a true statement regarding artifacts reviewed when assessing the CDE.

The Report on Compliance (ROC): This is the report that provides the assessment results completed by a qualified security assessor (QSA) that includes an onsite audit of the CDE123. The ROC is a detailed and comprehensive document that validates the organization’s compliance status and identifies any gaps or deficiencies that need to be remediated123. The ROC is required for merchants and service providers that process more than 6 million transactions annually, or that have suffered a breach or been compromised in the past year123. Therefore, option B is a true statement regarding artifacts reviewed when assessing the CDE.

The Self-Assessment Questionnaire (SAQ): This is a questionnaire that provides a validation tool for merchants and service providers that are not required to submit a ROC123. The SAQ is a self-assessment tool that allows the organization to evaluate its own compliance status and identify any gaps or deficiencies that need to be remediated123. The SAQ does not provide independent testing of controls, as it is based on the organization’s self-reported answers and evidence123. Therefore, option C is a false statement regarding artifacts reviewed when assessing the CDE.

A System and Organization Controls (SOC) report: This is a report that provides an independent audit of the internal controls and processes of a service organization, such as a cloud provider, a data center, or a payment processor45. The SOC report is not specific to PCI DSS, but rather to other standards and frameworks, such as SOC 1 (based on SSAE 18), SOC 2 (based on Trust Services Criteria), or SOC 3 (based on SOC 2)45. A SOC report is not sufficient to demonstrate PCI DSS compliance, as it may not cover all the requirements and controls of the PCI DSS, or it may not address the same location or scope as the CDE123. Therefore, option D is a false statement regarding artifacts reviewed when assessing the CDE.

References: The following resources support the verified answer and explanation:

1: PCI DSS Quick Reference Guide

2: PCI DSS FAQs

3: PCI DSS Glossary

4: What is a SOC report?

5: SOC Reports: What They Are, and Why They Matter