Vendor Due Diligence: Best First Action Before Contract
A company is considering a new SaaS vendor that will process customer records. What is the best first action before signing the contract?
Quick Answer
The answer is to perform vendor due diligence and review the vendor’s security controls before signing any contract. This is the correct first action because it proactively assesses whether the SaaS vendor’s security posture can adequately protect customer records, aligning with the Security+ principle of “trust but verify.” By reviewing controls like encryption, access management, and compliance certifications (e.g., GDPR, HIPAA), you identify risks before any data is shared or a legally binding agreement is signed. On the SY0-701 exam, this question tests your understanding of the third-party risk management lifecycle, often appearing as a trap where students choose “sign a BPA” or “run a penetration test” too early—remember, due diligence comes before any legal or technical action. A helpful memory tip is “DD before BPA”: Due Diligence must happen before you even discuss a Business Partner Agreement.
⚠ Common exam trap
Candidates often think 'allowing access immediately and monitoring' is acceptable due to a false sense of security from logging tools, but CompTIA tests that proactive due diligence is mandatory before any data sharing, as monitoring alone cannot prevent contractual or compliance violations.
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
✓
Perform vendor due diligence and review the vendor's security controls
Performing vendor due diligence and reviewing the vendor's security controls is the best first action because it proactively assesses the SaaS vendor's ability to protect customer records before any data is shared. This aligns with the principle of 'trust but verify' and ensures that the vendor's security posture meets the company's compliance requirements (e.g., GDPR, HIPAA) and risk tolerance before signing a legally binding contract.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
Perform vendor due diligence and review the vendor's security controls
Why this is correct
Vendor due diligence evaluates the SaaS provider's security controls, certifications, data handling and breach history before contractual commitment, exposing risks that contract terms cannot retroactively fix. This satisfies the stem's requirement for the best first action prior to signing, since assessment must precede agreement.
- ✗
Allow the vendor access immediately and monitor for misuse afterward
Why it's wrong here
Granting access before assessment exposes customer records to an unvetted third party with no contractual safeguards in place. Monitoring detects misuse after harm occurs. Vendor risk assessment before contract signing is the control; continuous monitoring suits ongoing assurance for already-approved vendors.
- ✗
Ask the vendor to send a marketing brochure and pricing sheet only
Why it's wrong here
Marketing brochures and pricing sheets contain no security information, so the vendor's controls over customer records remain unassessed before signing. Such materials suit commercial evaluation of features and cost, not due diligence; security questionnaires, certifications, and audit reports are needed.
- ✗
Wait until a security incident occurs before reviewing the vendor
Why it's wrong here
Reviewing the vendor only after an incident means customer records are already exposed under an unassessed contract. Pre-contract due diligence, such as reviewing the vendor's security posture and certifications, is the required first action; incident response applies once a vendor is already engaged.
Go deeper
Related to this question
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Vendor Due Diligence in Security
Key term
Security
Security in IT is the practice of protecting systems, networks, and data from unauthorized access, damage, or theft.
Key term
General Data Protection Regulation
A European Union law that gives individuals control over their personal data and sets strict rules for how organizations collect, store, and process that data.
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Same concept, more angles
1 more way this is tested on SY0-701
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Variation 1. A company is evaluating a new payroll SaaS provider that will store employee tax and bank details. Before signing the contract, which action BEST supports vendor due diligence?
medium- A.Ask the vendor for a marketing brochure describing platform features and uptime claims.
- ✓ B.Review a current independent security attestation and verify contractual security obligations.
- C.Accept the vendor’s assurance that its customers have never experienced incidents.
- D.Wait until after go-live and then review the security posture during the first annual audit.
Why B: Vendor due diligence for a SaaS provider handling sensitive employee data (tax and bank details) requires verifying independent security attestations (e.g., SOC 2 Type II, ISO 27001 certification) and ensuring contractual security obligations (e.g., data encryption, breach notification, right to audit) are explicitly defined. This provides objective, audited evidence of the vendor's security posture rather than relying on marketing claims or unverified assurances.
JA
Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
This SY0-701 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 SY0-701 exam.