The answer is insufficient encryption of data at rest and in transit, as these two controls are the most significant risks to data privacy and regulatory compliance during a healthcare cloud migration. Without robust encryption, electronic health records become vulnerable to unauthorized access during storage or transmission, directly violating HIPAA’s Security Rule and exposing the organization to severe penalties. On the CRISC exam, this question tests your ability to prioritize technical controls over operational concerns in a risk scenario, often appearing in the “Risk Response” domain where encryption is a primary mitigation for data privacy risks. A common trap is selecting “data residency and jurisdiction issues” alone, but while that is a top risk, the question asks for two risks, and encryption failures are equally critical because they enable the very exposure that jurisdiction problems threaten. Remember the mnemonic “E.D.G.E.” — Encryption and Data residency are the two edges of the compliance sword.
CRISC IT Risk Identification Practice Question
This CRISC practice question tests your understanding of it risk identification. 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 healthcare organization is migrating its electronic health records (EHR) system to a public cloud. The risk manager identifies several risks. Which TWO of the following are the MOST significant risks related to data privacy and regulatory compliance?
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Data residency and jurisdiction issues.
Data residency and jurisdiction issues (B) are a top risk because healthcare data is subject to strict regulations like HIPAA and GDPR, which may require data to remain within specific geographic boundaries. Migrating EHRs to a public cloud can inadvertently place data in regions with different legal protections, exposing the organization to non-compliance and legal penalties.
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.
✗
Potential for service downtime affecting patient care.
Why it's wrong here
Downtime is an availability risk, not specifically privacy/compliance.
✓
Data residency and jurisdiction issues.
Why this is correct
Data may be stored in countries with inadequate privacy laws.
Related concept
Read the scenario before looking for a memorised answer.
✗
Loss of control over the cloud provider's internal access controls.
Why it's wrong here
Loss of control is a general risk but not the most significant for privacy.
✓
Insufficient encryption of data at rest and in transit.
Why this is correct
Inadequate encryption directly risks data confidentiality and compliance.
Related concept
Read the scenario before looking for a memorised answer.
✗
Vendor lock-in due to proprietary APIs.
Why it's wrong here
Vendor lock-in is a business risk, not primarily privacy/compliance.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates often confuse operational risks (like downtime) or general security risks (like access control) with the specific regulatory and privacy risks that are most significant for healthcare data in the cloud, while overlooking the foundational compliance requirements of data residency and encryption.
Detailed technical explanation
How to think about this question
Under HIPAA, covered entities must ensure that ePHI is not stored or processed in jurisdictions lacking equivalent privacy protections; cloud providers often use a shared responsibility model where the customer retains compliance accountability. GDPR Article 44-49 imposes strict restrictions on cross-border data transfers, requiring mechanisms like Standard Contractual Clauses (SCCs) or Binding Corporate Rules (BCRs) to legitimize data flow to third countries. Insufficient encryption (D) is critical because it directly violates HIPAA Security Rule §164.312(a)(1) and §164.312(e)(1), which mandate encryption of ePHI at rest and in transit as an addressable implementation specification.
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 small business has 20 workstations on the 192.168.1.0/24 network and one public IP from its ISP. The router uses PAT (NAT overload) so all 20 devices share one public address using different source ports. NAT questions test whether you understand the four address terms and which direction each translation applies.
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.
IT Risk Identification — This question tests IT Risk Identification — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: Data residency and jurisdiction issues. — Data residency and jurisdiction issues (B) are a top risk because healthcare data is subject to strict regulations like HIPAA and GDPR, which may require data to remain within specific geographic boundaries. Migrating EHRs to a public cloud can inadvertently place data in regions with different legal protections, exposing the organization to non-compliance and legal penalties.
What should I do if I get this CRISC 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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