Explanation: Compliance with legal and regulatory standards ensures that the vendor operates within the necessary frameworks to protect sensitive data and mitigate risks.

Risks of Incorrect Answer:

Non-compliance may result in fines, legal action, or reputational damage.

Data security and privacy measures may not meet minimum industry requirements, exposing client data to risks.

Applicable Frameworks:

GDPR (Art. 5, 32): Covers data protection principles and security requirements.

GLBA: Regulates the security of financial data.

PCI DSS: Mandates security measures for handling payment card data.

SOX: Requires robust financial data security controls.''

Explanation:

An internal team focused on audit and compliance ensures continuous monitoring and quick resolution of risks and regulatory challenges.

Risks of Incorrect Answer:

Unaddressed compliance gaps may lead to regulatory violations.

Security risks may remain undetected without dedicated oversight.

Applicable Frameworks:

ISO 27001 (A.18.1.1): Requires identification of applicable legal, statutory, and regulatory requirements.

NIST CSF (ID.GV-1): Ensures cybersecurity governance, including dedicated roles for managing compliance and risks.''

Explanation:

Independent audits validate a vendor’s compliance with security standards and provide an objective assessment of their security posture.

Risks of Incorrect Answer:

Lack of independent verification may indicate gaps in compliance or security practices.

Unidentified high-risk issues could pose significant threats to client data.

Applicable Frameworks:

SOC 2: Requires independent audits to assess controls related to security, availability, and confidentiality.

ISO 27001 (A.18.2.3): Recommends independent review of information security controls.

PCI DSS (12.8.4): Mandates service providers to undergo regular audits.