The correct risk response is to avoid the risk by keeping sensitive data on-premises and using the cloud only for non-sensitive workloads. This is because the agency’s very low risk appetite for data leakage, combined with strict data sovereignty laws, cannot be sufficiently mitigated by encryption or contractual controls when the cloud provider’s physical datacenters reside in a foreign jurisdiction with different legal frameworks. Shared tenancy in a public cloud inherently increases exposure to side-channel attacks and misconfiguration, and even with robust encryption at rest and in transit, foreign legal authorities or provider staff could compel key disclosure, making avoidance the only response that fully eliminates the threat. On the CRISC exam, this scenario tests your ability to prioritize risk treatment options when residual risk exceeds the organization’s appetite—a common trap is choosing “mitigate” with encryption, forgetting that data sovereignty laws override technical controls. Memory tip: “If the law can reach the key, avoidance is the key.”
CRISC IT Risk Assessment Practice Question
This CRISC practice question tests your understanding of it risk assessment. The scenario asks you to isolate a root cause — eliminate options that address a different problem before choosing. 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 government agency is migrating its critical applications to a public cloud infrastructure. The risk assessment reveals that the cloud provider uses shared tenancy, and the agency's sensitive data will be stored alongside other customers' data. The agency has a very low risk appetite for data leakage and must comply with strict data sovereignty laws. The cloud provider offers data encryption at rest and in transit, as well as dedicated hardware security modules (HSMs) for key management. However, the provider's physical datacenters are located in another country with different legal frameworks. As the risk practitioner, which of the following should be the PRIMARY risk response?
Clue words in this question
Noticing these words before you look at the options changes how you read each choice.
Clue: "primary"
Why it matters: Asks for the main purpose or function, not a secondary benefit. Eliminate answers that describe side-effects or partial functions.
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Avoid the risk by keeping sensitive data on-premises and using the cloud only for non-sensitive workloads.
Option A is correct because the agency's very low risk appetite for data leakage and strict data sovereignty laws cannot be adequately mitigated by encryption or contractual measures when the physical datacenters are in a foreign jurisdiction with different legal frameworks. Shared tenancy in a public cloud inherently increases the attack surface for side-channel attacks and misconfiguration risks, and even with encryption at rest (e.g., AES-256) and in transit (e.g., TLS 1.3), the cloud provider's staff or foreign legal authorities could potentially access decryption keys or compel key disclosure. Avoiding the risk by keeping sensitive data on-premises eliminates the exposure to foreign legal frameworks and shared tenancy, directly aligning with the agency's risk appetite.
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.
✓
Avoid the risk by keeping sensitive data on-premises and using the cloud only for non-sensitive workloads.
Why this is correct
Avoidance is appropriate given low risk appetite.
Clue confirmation
The clue word "primary" in the question point toward this answer.
Related concept
Read the scenario before looking for a memorised answer.
✗
Reduce the risk by negotiating a contract that includes specific data handling clauses and audit rights.
Why it's wrong here
Contract may not be enforceable over foreign jurisdiction.
✗
Transfer the risk by requiring the provider to maintain a large cyber insurance policy.
Why it's wrong here
Insurance does not address data sovereignty.
✗
Accept the risk after verifying the provider's compliance certifications.
Why it's wrong here
Certifications do not guarantee legal compliance.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates often overestimate the effectiveness of encryption and contractual controls, failing to recognize that physical jurisdiction and shared tenancy introduce residual risks that cannot be fully mitigated, making avoidance the only appropriate response for a very low risk appetite.
Detailed technical explanation
How to think about this question
Shared tenancy in public cloud environments relies on hypervisor isolation (e.g., KVM, Xen) and memory deduplication, which have known vulnerabilities such as Rowhammer or L1 Terminal Fault (L1TF) that can allow cross-tenant data extraction. Even with dedicated HSMs (e.g., AWS CloudHSM or Azure Dedicated HSM) managing keys, the cloud provider's root access to the physical hardware and firmware could theoretically be compelled by foreign law enforcement under laws like the US CLOUD Act, which permits access to data stored on US-based servers regardless of the customer's nationality. In a real-world scenario, a government agency using a US-based cloud provider for sensitive data would face the risk of a National Security Letter (NSL) or FISA order compelling data access without the agency's knowledge.
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 Assessment — This question tests IT Risk Assessment — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: Avoid the risk by keeping sensitive data on-premises and using the cloud only for non-sensitive workloads. — Option A is correct because the agency's very low risk appetite for data leakage and strict data sovereignty laws cannot be adequately mitigated by encryption or contractual measures when the physical datacenters are in a foreign jurisdiction with different legal frameworks. Shared tenancy in a public cloud inherently increases the attack surface for side-channel attacks and misconfiguration risks, and even with encryption at rest (e.g., AES-256) and in transit (e.g., TLS 1.3), the cloud provider's staff or foreign legal authorities could potentially access decryption keys or compel key disclosure. Avoiding the risk by keeping sensitive data on-premises eliminates the exposure to foreign legal frameworks and shared tenancy, directly aligning with the agency's risk appetite.
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.
Are there clue words in this question I should notice?
Yes — watch for: "primary". Asks for the main purpose or function, not a secondary benefit. Eliminate answers that describe side-effects or partial functions.
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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