CAS-004 Governance, Risk and Compliance Practice Question
This CAS-004 practice question tests your understanding of governance, risk and compliance. Read the scenario carefully and evaluate each option against the stated constraints before committing to an answer. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
A healthtech startup is developing a mobile app that collects PHI. They plan to use a third-party cloud provider for data storage. What is the most critical compliance requirement before signing the contract?
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Execute a Business Associate Agreement (BAA) with the provider
Under HIPAA, a Business Associate Agreement (BAA) is a mandatory contract that ensures the third-party cloud provider (a business associate) will safeguard Protected Health Information (PHI). Without a BAA, the startup would be in direct violation of HIPAA's Privacy and Security Rules, regardless of other security measures. This requirement is non-negotiable before any PHI is shared or stored by the provider.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
✗
Verify the provider's data center locations comply with data residency laws
Why it's wrong here
Data residency is important but secondary to the BAA requirement.
✓
Execute a Business Associate Agreement (BAA) with the provider
Why this is correct
A BAA is a legal requirement under HIPAA for any vendor handling PHI.
Related concept
Read the scenario before looking for a memorised answer.
✗
Review the provider's SOC 2 Type II report
Why it's wrong here
SOC 2 provides assurance but does not establish contractual obligations for PHI.
✗
Ensure all data is encrypted at rest and in transit
Why it's wrong here
Encryption is necessary but not sufficient without a BAA.
Common exam traps
Common exam trap: answer the scenario, not the keyword
CompTIA often tests the distinction between contractual compliance (BAA) and technical controls (encryption, SOC reports), leading candidates to prioritize security measures over the mandatory legal agreement required by HIPAA.
Detailed technical explanation
How to think about this question
A BAA legally binds the cloud provider to comply with HIPAA's Administrative, Physical, and Technical Safeguards (45 CFR § 164.308–312). It must specify permitted uses of PHI, require breach notification, and mandate that the provider flow down these obligations to any subcontractors. Without a BAA, the startup assumes full liability for any PHI exposure, even if the provider's infrastructure is secure.
KKey Concepts to Remember
Read the scenario before looking for a memorised answer.
Find the constraint that changes the correct option.
Eliminate answers that are true in general but not in this case.
TExam Day Tips
→Watch for words such as best, first, most likely and least administrative effort.
→Review why wrong options are wrong, not only why the correct option is correct.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
How this comes up in practice
A practitioner preparing for the CAS-004 exam encounters this exact type of scenario on the job. The correct answer here is not the most general option — it is the best answer for the specific constraint described. Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option. Real exam questions reward reading the full scenario before eliminating options, because the constraint defines which answer fits.
What to study next
Got this wrong? Here's your next step.
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
Governance, Risk and Compliance — This question tests Governance, Risk and Compliance — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: Execute a Business Associate Agreement (BAA) with the provider — Under HIPAA, a Business Associate Agreement (BAA) is a mandatory contract that ensures the third-party cloud provider (a business associate) will safeguard Protected Health Information (PHI). Without a BAA, the startup would be in direct violation of HIPAA's Privacy and Security Rules, regardless of other security measures. This requirement is non-negotiable before any PHI is shared or stored by the provider.
What should I do if I get this CAS-004 question wrong?
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
What is the key concept behind this question?
Read the scenario before looking for a memorised answer.
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Question Discussion
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