According to IIA guidance, which of the following would be the best first step to manage risk when a third party is overseeing the organization’s network and data’?

According to IIA guidance, which of the following would be the best first step to manage risk when a third party is overseeing the organization’s network and data’?
A . Creating a comprehensive reporting system for vendors to demonstrate their ongoing due diligence in network operations.
B . Drafting a strong contract that requires regular vendor control reports and a right-to-audit clause
C . Applying administrative privileges to ensure right-to-access controls are appropriate
D . Creating a standing cybersecurity committee to identify and manage risks related to data security.

View Answer

Answer: B

Explanation:

Managing Third-Party Risk: When a third party oversees the organization’s network and data, the primary concern is to manage and mitigate risks associated with outsourcing critical functions.

Strong Contract Provisions: Drafting a strong contract that includes specific provisions such as regular vendor control reports and a right-to-audit clause is essential. These provisions ensure that the organization maintains oversight and control over the third party’s activities.

IIA Standards: Standard 2201 C Planning Considerations requires that internal auditors consider the organization’s objectives and the means by which they are achieved, including the role of third parties.

Contract Management:

Control Reports: Regular control reports from the vendor provide insights into their performance and compliance with agreed-upon standards.

Right-to-Audit Clause: This clause allows the organization to periodically audit the third party to ensure compliance with contractual obligations and to assess the effectiveness of their control environment.

Reference: Ensuring that third-party vendors adhere to the same standards of risk management and control as the organization helps in mitigating risks related to data security and network management.