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Question 515 - CISM discussion

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An organization that conducts business globally is planning to utilize a third-party service provider to process payroll information. Which of the following issues poses the GREATEST risk to the organization?

A.
The third party does not have an independent assessment of controls available for review.
Answers
A.
The third party does not have an independent assessment of controls available for review.
B.
The third party has not provided evidence of compliance with local regulations where data is generated.
Answers
B.
The third party has not provided evidence of compliance with local regulations where data is generated.
C.
The third-party contract does not include an indemnity clause for compensation in the event of a breach.
Answers
C.
The third-party contract does not include an indemnity clause for compensation in the event of a breach.
D.
The third party's service level agreement (SLA) does not include guarantees of uptime.
Answers
D.
The third party's service level agreement (SLA) does not include guarantees of uptime.
Suggested answer: B

Explanation:

The third party's lack of compliance with local regulations poses the greatest risk to the organization, as it may expose the organization to legal, regulatory, or reputational consequences, such as fines, sanctions, lawsuits, or loss of customer trust. Payroll information is considered sensitive personal data that may be subject to different privacy and security laws depending on the jurisdiction where it is generated, processed, or stored. Therefore, the organization should ensure that the third party adheres to the applicable regulations and standards, and obtains the necessary certifications or attestations to demonstrate compliance.

Reference= CISM Review Manual 2022, page 361; CISM Exam Content Outline, Domain 1, Task 1.22;Ensuring Vendor Compliance and Third-Party Risk Mitigation;How to Manage Access Risk Regarding Third-Party Service Providers

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asked 01/10/2024
Salman Hashmi
39 questions
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