easyMultiple Choice
CAS-004 Practice Question: Is implementing a third-party risk management…
An organization is implementing a third-party risk management program. Which of the following is the FIRST step in the vendor risk assessment process?
⚠ Common exam trap
The trap here is that candidates often jump to contractual or audit steps (options B or C) because they seem like concrete actions, but the exam tests the logical sequence of risk management, where identification of the asset (vendor and data) must precede any control evaluation.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Identify the vendor and the type of data it will handle
The first step in a vendor risk assessment is to identify the vendor and the type of data it will handle. This foundational step determines the scope and criticality of the assessment, as the data classification (e.g., PII, PHI, PCI-DSS) directly dictates the required security controls and regulatory compliance obligations. Without this identification, subsequent steps like audits or contract reviews lack context and may miss key risk areas.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
Identify the vendor and the type of data it will handle
Why this is correct
Vendor risk assessment must begin by identifying the vendor and classifying the data it will handle, since data sensitivity determines the depth of due diligence, contractual controls and ongoing monitoring required. Without this scoping step, subsequent assessment activities cannot be appropriately tailored.
- ✗
Conduct an on-site audit of the vendor's facilities
Why it's wrong here
An on-site audit is a deep-dive assurance activity performed after the vendor has been identified and initially assessed; it presupposes scoping and tiering already exist. It is tempting because audits produce the strongest evidence, and would be correct later for high-risk or critical vendors requiring independent verification of controls.
- ✗
Review the vendor's contractual security clauses
Why it's wrong here
Contractual security clauses are negotiated and reviewed once a vendor has been selected and risk-rated, so this occurs after initial assessment, not before it. It is tempting because contracts enforce security obligations, and reviewing them would be correct during due diligence or renewal for a vendor already inside the assessment pipeline.
- ✗
Determine risk treatment options
Why it's wrong here
Determining risk treatment options follows risk identification, analysis and evaluation; you cannot treat a risk before it has been assessed and rated. It is tempting because treatment is the visible outcome of the programme, and would be correct once vendor risks have been documented and prioritised against organisational risk appetite.
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JA
Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
This CAS-005 practice question is part of Courseiva's free CompTIA certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the CAS-005 exam.