A directive control is a policy, procedure, or guideline that establishes expected behavior to mitigate risks. In the context of outsourcing HR functions, a data protection clause in the contract ensures that the service provider is legally obligated to protect sensitive employee data.
* Legal and Regulatory Compliance - It ensures the service provider complies with GDPR, CCPA, ISO 27001, SOC 2, and other data protection laws.
* Defines Security Responsibilities - Specifies encryption, access controls, data retention policies, and penalties for non-compliance.
* Enforceable Accountability - The contract holds the provider accountable for data breaches or misuse.
* Industry Best Practice - Most outsourcing agreements include a Data Processing Agreement (DPA) as part of contractual terms.
* A. Require a SOC report - A SOC (Service Organization Control) report assesses the provider's internal controls, but it does not enforce compliance.
* C. Obtain a nondisclosure agreement (NDA) - An NDA is useful, but it only prevents individuals from sharing data; it does not define data security requirements.
* D. Encrypt the employees' data before transmitting it - Encryption is a strong preventive control, but it does not provide a directive policy like a contract clause does.
* IIA's International Professional Practices Framework (IPPF) - Standard 2201 - Requires internal auditors to assess contract terms related to risk management.
* COSO's Enterprise Risk Management (ERM) Framework - Recommends contractual agreements for third-party risk mitigation.
* ISO 27001 Annex A.15.1.2 - Specifies that security requirements must be addressed in supplier contracts.
Why a Data Protection Clause Is the Most Appropriate Directive Control?Why Not the Other Options?IIA References:# Final Answer: B. Include a data protection clause in the contract with the service provider.
(Most appropriate directive control).