GRC - Governance, Risk, and Compliance Third-Party Risk Management Questions and Answers

Question 1

A financial services firm is heavily dependent on a single cloud service provider for its core banking, data processing, and customer relationship management systems.
This over-reliance on one vendor PRIMARILY exposes the firm to which specific type of risk?

Accepted Answer

Concentration Risk

Answer

Operational Risk

Answer

Compliance Risk

Answer

Reputational Risk

Question 2

Which of the following BEST defines fourth-party risk within a Third-Party Risk Management (TPRM) program?

Accepted Answer

The risk posed by a vendor's subcontractor, whose failure could impact the services the primary vendor delivers to your organization.

Answer

The risk that a primary vendor will fail to meet its contractual obligations due to its own internal control failures.

Answer

The risk of engaging multiple vendors from the same high-risk geographic location.

Answer

The risk associated with the offboarding process when terminating a contract with a third-party vendor.

Question 3

During the TPRM lifecycle, which phase occurs *after* a vendor has been onboarded and is focused on continuously tracking their performance, security posture, and adherence to contractual obligations?

Accepted Answer

Ongoing Monitoring

Answer

Due Diligence

Answer

Contract Negotiation

Answer

Risk Assessment

Question 4

A GRC professional is reviewing a contract for a new data analytics vendor. To ensure the organization can independently verify the vendor's security controls and compliance with data protection policies, which clause is MOST critical to include in the agreement?

Accepted Answer

Right to Audit

Answer

Limitation of Liability

Answer

Confidentiality

Answer

Service Level Agreement (SLA)

Question 5

A healthcare organization is conducting due diligence on a potential vendor for processing patient medical records. Which of the following activities is a critical component of this due diligence process?

Accepted Answer

Reviewing the vendor's SOC 2 report and compliance certifications.

Answer

Negotiating the final price for the services.

Answer

Developing the offboarding plan for the vendor.

Answer

Measuring the vendor's performance against established KPIs.

Question 6

A manufacturing company is formalizing its TPRM program. The program manager insists that the process ends once a vendor contract is signed and the service is live. Why is this approach a significant GRC failure?

Accepted Answer

It overlooks the need for ongoing monitoring, where new risks can emerge.

Answer

It focuses too heavily on financial due diligence over security assessments.

Answer

It assigns responsibility to the procurement team instead of the risk team.

Answer

It fails to account for the termination and offboarding phase of the lifecycle.