Explanation:
Identification of the assets to be protected is the first step in the development of a risk management program. A listing of the threats that can affect the performance of these assets and criticality analysis are later steps in the process. Data classification is required for defining access controls and in criticality analysis.

Explanation:
Risks are mitigated by implementing appropriate security and control practices. Insurance is a mechanism for transferring risk. Audit and certification are mechanisms of risk assurance, while contracts and SLAs are mechanisms of risk allocation.

Explanation:
An IS auditor must identify the assets, look for vulnerabilities, and then identify the threats and the likelihood of occurrence. Choices A, B and D should be discussed with the CIO, and a report should be delivered to the CEO. The report should include the findings along with priorities and costs.

Explanation:
The risk management process is about making specific, security-related decisions, such as the level of acceptable risk. Choices A, B and D are not ultimate goals of the risk management process.

Explanation:
With a policy of well-archived e-mail records, access to or retrieval of specific e-mail records is possible without disclosing other confidential e-mail records. Security and/or audit policies would not address the efficiency of record retrieval, and destroying e-mails may be an illegal act.

Explanation:
It is critical that an independent security review of an outsourcing vendor be obtained because customer credit information will be kept there. Compliance with security standards or organization policies is important, but there is no way to verify or prove that that is the case without an independent review. Though long experience in business and good reputation is an important factor to assess service quality, the business cannot outsource to a provider whose security control is weak.

Explanation:
When the functions of an IS department are outsourced, an IS auditor should ensure that a provision is made for independent audit reports that cover all essential areas, or that the outsourcer has full audit access. Although it is necessary to document the fact that background checks are performed, this is not as important as provisions for audits. Financial measures such as year-to-year incremental cost reductions are desirable to have in a service level agreement (SLA); however, cost reductions are not as important as the availability of independent audit reports or full audit access. An SLA might include human relationship measures such as resource planning, staff turnover, development or training, but this is not as important as the requirements for independent reports or full audit access by the outsourcing organization.

Explanation:
Contractual requirements are one of the sources that should be consulted to identify the requirements for the management of information assets. Vendor best practices provides a basis for evaluating how competitive an enterprise is, while security incident summaries are a source for assessing the vulnerabilities associated with the IT infrastructure. CERT (www.cert.org) is an information source for assessing vulnerabilities within the IT infrastructure.

Explanation:
Many countries have enacted regulations to protect the confidentiality of information maintained in their countries and/or exchanged with other countries. Where a service provider outsources part of its services to another service provider, there is a potential risk that the confidentiality of the information will be compromised. Choices B and C could be concerns but are no related to ensuring the confidentiality of information. There is no reason why an IS auditor should be concerned with choice D.

Explanation:
An organization’s core activities generally should not be outsourced, because they are what the organization does best; an IS auditor observing that should be concerned. An IS auditor should not be concerned about the other conditions because specification of periodic renegotiation in the outsourcing contract is a best practice. Outsourcing contracts cannot be expected to cover every action and detail expected of the parties involved, while multisourcing is an acceptable way to reduce risk.