Comprehensive and Detailed Explanation:
The greatest concern is if the vendor is excluded from the organization's third-party due diligence process.
Without proper due diligence, the organization has no assurance that the vendor meets minimum security and privacy requirements, exposing PII to significant risk.
* Option A: External-facing services carry risk but can be mitigated by proper controls.
* Option B: Lack of dedicated privacy staff may increase risk, but controls may still exist.
* Option C: Fourth-party hosting adds risk but is acceptable if included in due diligence.
* Option D: Correct - exclusion from due diligence represents a fundamental breakdown in vendor risk management.
# ISACA Reference: CISA Review Manual 27th Edition, Domain 5, section on third-party/vendor risk management and data privacy.