Your organization is planning to engage with a third-party vendor to offload the maintenance of a non-core business application, with the intention of reducing the company's burden of patch management and system upgrades. To ensure that the organizational risk is appropriately managed, which of the following would be the BEST approach?
Procure additional security solutions to protect the business application instead of offloading it.
Purchase cyber insurance to cover potential losses due to system vulnerabilities in the business application.
Renegotiate existing service contracts with the third-party vendor to emphasize risk management.
Enter into a outsourcing agreement with the third-party vendor that includes service level agreements (SLAs) specifically covering security patching and system upgrades.
Transferring the risk associated with maintaining and patching a business application to a third-party vendor, through methods such as outsourcing, is a strategic way to manage organizational risk. It offloads the responsibility of maintaining the security and functionality of the application, allowing the organization to focus on core business functions. While contractual agreements (SLAs) and cyber insurance can complement risk transference, they do not by themselves transfer the maintenance risks. Procuring additional security solutions does not transfer the risk; it is a way to mitigate risk within the organization.
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What are service level agreements (SLAs) and why are they important?
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What is risk transference and how does it relate to outsourcing?
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How does cyber insurance fit into the risk management strategy?