Third-party and supply chain risk assurance

“Third-party and supply chain risk assurance” sounds broad, but auditors typically look for a narrow set of operational outcomes: you know which third parties can affect sensitive information, you evaluated their control environment before exposure occurred, and you keep monitoring as conditions change. Under HITRUST, your job is not to “guarantee” a third party’s security. Your job is to run a repeatable assurance process and retain evidence that it operates.

This requirement becomes urgent in healthcare and adjacent service providers because third parties often host, process, transmit, or can otherwise access sensitive information through SaaS apps, managed service providers, billing platforms, call centers, data analytics tools, EDI connections, and subcontractors. The practical failure mode is predictable: teams can show a policy, maybe a questionnaire, but cannot show (1) a complete inventory, (2) risk-based decisions, (3) contract enforcement, and (4) ongoing monitoring with follow-through.

This page gives requirement-level implementation guidance you can put into production quickly: who to scope, what “assurance” should look like in real workflows, what evidence to retain, what auditors ask, and a 30/60/90-day plan you can run with.

Requirement: third-party and supply chain risk assurance requirement (HITRUST)

Plain-English interpretation: You must assess and monitor the security controls of third parties that could impact sensitive information handled by your organization, and you must prove that this assurance work happens consistently and is tied to risk.

This includes two distinct obligations:

1. Pre-engagement assurance (before a third party gets access to systems or sensitive information).
2. Ongoing assurance (monitoring and re-assessment over the lifecycle, including renewals, major changes, incidents, and subcontractor changes).

Regulatory text

HITRUST control requirements are licensed; the full standard text is not reproduced here. The available excerpt states: “Baseline implementation-intent summary derived from publicly available framework overviews; licensed standard text is not reproduced in this record.” The summarized intent for HITRUST-08 is: “Assess and monitor third-party controls impacting sensitive information.” ¹

What the operator must do: treat third-party assurance as a control with defined scope, required inputs, decision criteria, and retained evidence. Auditors will evaluate both control design (policy, procedure, roles, criteria) and control operation (completed reviews, approvals, monitoring results, remediation tracking) against your third-party population.

Who it applies to (entity and operational context)

Entity types commonly in scope: healthcare organizations and service providers seeking alignment with HITRUST expectations for third-party oversight ¹.

Operational contexts that make a third party “in scope”:

• The third party stores, processes, or transmits sensitive information on your behalf (including cloud hosting and SaaS).
• The third party has network or system access (VPN, admin console, support access, API access, SSO integration).
• The third party performs a security-relevant function (managed detection and response, IT operations, data destruction, backup, identity services).
• The third party can affect availability or integrity of systems supporting sensitive workflows (critical dependencies, single points of failure).
• The third party uses subcontractors that will touch your data or environment (fourth parties).

Practical scoping rule: If you would have to notify customers, patients, regulators, or leadership if that third party had an incident, treat it as in scope for assurance.

What you actually need to do (step-by-step)

Step 1: Build and maintain the third-party inventory (with data flow mapping)

Minimum fields that make the inventory audit-usable:

• Legal entity name, service name, business owner
• Services provided and where sensitive information touches (systems, data types, regions)
• Access model (none, user-level, privileged, API, network)
• Subcontractors involved (if known)
• Contract dates (start, renewal, termination), DPA/BAA status if applicable
• Last risk assessment date, next review trigger, open issues/exceptions

Operator tip: Tie this to procurement/AP + SSO directory + cloud app discovery so you don’t miss “shadow” third parties. Auditors routinely test completeness.

Step 2: Define tiering (inherent risk) and assurance requirements by tier

Create a tiering matrix that assigns each third party to a tier based on inherent risk inputs such as:

• Sensitivity of information handled
• Level of access (especially privileged access)
• Criticality to operations
• Connectivity to your environment
• Use of subcontractors

Then define, per tier:

• Required due diligence package (questionnaire, evidence review, attestations)
• Required contract clauses
• Monitoring cadence and triggers
• Approval authority (e.g., business owner + security + privacy)

Deliverable: a one-page “Third-Party Assurance Standard” that maps tier → required steps.

Step 3: Run pre-onboarding due diligence before exposure occurs

For in-scope third parties, perform and document:

• Security due diligence: questionnaire plus evidence review appropriate to the tier (policies, incident response, access controls, vulnerability management, audit reports where available).
• Privacy / data protection due diligence: data minimization, retention, breach notice obligations, permitted uses, cross-border considerations.
• Access design review: least privilege, MFA/SSO, logging, break-glass, separation of duties for support.
• Risk acceptance workflow: document compensating controls if the third party cannot meet a requirement.

Decision gate: “No contract signature / no access / no data sharing until assurance is complete,” except for documented emergencies with time-bound follow-up.

Step 4: Embed assurance into contracts and track obligations

This requirement fails most often at the contract layer. You need security terms that you can enforce and evidence that you track them. Your contracting checklist should address:

• Security control commitments (baseline measures)
• Right to audit / right to receive assurance artifacts
• Incident notification timelines and cooperation
• Subcontractor controls and flow-down requirements
• Data return/destruction at termination
• Access controls for support, logging, and monitoring expectations

Operationalize it: maintain a contract obligations register tied to each third party record (what clause exists, where it is in the contract, who owns it, and how you verify it).

Step 5: Continuous monitoring and lifecycle reassessment

Ongoing assurance should be event-driven and periodic. Build both:

• Triggers: security incident, major product change, change in hosting location, acquisition, new subcontractor, new integration, expanded data scope.
• Recurring review: reassess based on tier, and re-approve exceptions at renewal.

Monitoring inputs may include:

• Updated questionnaires and evidence refresh
• Reviewing third-party breach history disclosed to you
• Performance and availability issues that indicate operational risk
• Confirming access remains least privilege (access recertifications)

Step 6: Track findings to closure (or formally accept risk)

A third-party assessment that produces findings but no follow-up is a failed control in an audit. You need:

• Findings log with severity, due dates, owners (third party and internal)
• Remediation evidence intake (screenshots, updated policies, attestation letters, test results)
• Escalation path for overdue items
• Formal risk acceptance for unresolved issues, with sign-off and review date

Where Daydream fits naturally: teams struggle to keep inventory, tiering, contract obligations, reassessments, and remediation in one place. Daydream’s third-party assurance workflows can centralize intake (questionnaires/evidence), route approvals, track contract security clauses, and produce audit-ready exports without stitching together spreadsheets and email threads.

Required evidence and artifacts to retain

Auditors typically ask for “show me” evidence. Keep:

• Third-party inventory export (time-stamped) with tiering and scope fields
• Third-party risk assessment procedure + tiering methodology
• Completed due diligence packages for sampled third parties:
  • Questionnaire results
  • Evidence reviewed list and notes
  • Approval/decision record
• Contracts and DPAs/BAAs (as applicable) with security clauses highlighted or mapped
• Contract obligation register and monitoring records
• Ongoing monitoring logs (reassessments, alerts, access reviews)
• Findings/remediation tracker with closure evidence
• Exceptions and risk acceptances with approvals and review dates
• Offboarding records: access removal confirmation, data deletion/return attestations where required

Common exam/audit questions and hangups

Expect questions like:

• “How do you know your third-party inventory is complete?”
• “Which third parties can access sensitive information, and how do you prove that?”
• “Show your tiering criteria and why this third party is ‘medium’ vs ‘high’.”
• “Provide evidence the assessment occurred before onboarding.”
• “How do you ensure subcontractors are controlled?”
• “Show remediation for the findings you identified, or the signed risk acceptance.”

Hangup to anticipate: auditors will sample one or two critical third parties and then trace end-to-end: inventory entry → assessment → contract → monitoring → remediation. A gap anywhere breaks the story.

Frequent implementation mistakes (and how to avoid them)

1. Inventory is AP-only. AP lists miss free trials, departmental SaaS, and contractor relationships. Combine procurement + SSO/app discovery + IT access lists.
2. Tiering exists but doesn’t drive action. If high-risk third parties get the same lightweight check as low-risk ones, auditors see “paper program.”
3. Questionnaire-only assurance. For higher tiers, require evidence review or independent assurance artifacts where available.
4. Contracts aren’t mapped to controls. A contract in a repository is not operational proof. Maintain a clause checklist and an obligation tracker.
5. No lifecycle triggers. Programs fail when a third party’s scope expands (new data types, new integration) without reassessment.
6. Findings are “FYI.” If you can’t show closure or risk acceptance, the assessment did not reduce risk.

Enforcement context and risk implications

No public enforcement cases were provided in the source catalog for this requirement, so this page does not cite specific enforcement outcomes. Practically, weak third-party assurance increases your exposure to security incidents and audit findings because third parties often sit on the same critical path as your own systems and controls. Treat assurance evidence as part of incident readiness: after an incident, you will need to show what you required, what you verified, and what you monitored.

Practical 30/60/90-day execution plan

First 30 days: establish scope, ownership, and minimum viable workflow

• Name program owners: Security (control owner), Procurement, Legal, Privacy, and key business units.
• Build the initial third-party inventory from procurement/AP plus SSO app list and IT access records.
• Define tiering criteria and a simple tier-to-requirements matrix.
• Create intake and decision gates for new third parties (no access/data before approval, with an emergency exception path).
• Start a findings log template and a contract clause checklist.

Days 31–60: assess the top-risk population and fix contract gaps

• Identify highest-risk third parties (sensitive info + privileged access + criticality).
• Complete due diligence packages for those third parties first; document decisions and exceptions.
• Update contracting playbooks to include required security clauses and subcontractor flow-down.
• Create a contract obligations register and map each key clause to an owner and verification method.
• Pilot ongoing monitoring triggers (incident notification, scope change, renewal reassessment).

Days 61–90: operationalize monitoring, reporting, and audit readiness

• Expand assessments to the broader in-scope population based on tier.
• Set reassessment schedules by tier and implement event-driven reassessment triggers.
• Run one internal “mock audit” sample: pick two third parties and prove the full chain of evidence.
• Produce recurring reporting for leadership: inventory completeness, assessment status, open findings, overdue remediation, and exceptions.
• If you are scaling, implement workflow tooling (for example, Daydream) to manage evidence intake, approvals, renewals, and audit exports with consistent timestamps and accountability.

Frequently Asked Questions

What counts as “supply chain” for this third-party and supply chain risk assurance requirement?

Treat it as any external dependency that can affect the confidentiality, integrity, or availability of sensitive information or the systems that handle it. That includes SaaS, managed services, contractors with access, and subcontractors used by your third parties.

Do we need independent audit reports (like SOC 2) for every third party?

No. Use a risk-based approach: higher-risk third parties should provide stronger assurance evidence, while low-risk third parties can often be assessed with lighter due diligence. Document your tiering rules and apply them consistently.

How do we prove our third-party inventory is complete?

Auditors expect you to reconcile multiple sources, not rely on one list. Combine procurement/AP data with SSO/application lists and IT access records, then document the reconciliation process and outcomes.

What if a critical third party refuses certain security clauses?

Record the gap, apply compensating controls where possible (reduced access, segmentation, stronger monitoring), and route a formal risk acceptance to the correct approving authority. Revisit the exception at renewal or upon material changes.

How often should we reassess third parties?

Set a recurring reassessment schedule by risk tier and add event-based triggers like incidents, new integrations, and scope expansions. The key audit point is that your frequency is defined, risk-based, and followed.

Who should own third-party assurance: Security, Procurement, or Legal?

Security usually owns the control requirements and risk decisions, Procurement owns intake and supplier management, and Legal owns contract language. Assign one accountable program owner and define handoffs so assessments, contracting, and monitoring do not drift apart.

Related compliance topics

• 2025 SEC Marketing Rule Examination Focus Areas
• Access and identity controls
• Access Control (AC)
• Access control and identity discipline
• Access control lifecycle management

Footnotes

1. HITRUST certification overview