Security governance and third-party oversight

The PCI DSS 4.0 security governance and third-party oversight requirement expects you to keep security policies under active governance and formally manage which PCI DSS responsibilities are performed by you versus each third-party service provider (TPSP). To operationalize it fast, publish owned policies, define role/accountability, and maintain TPSP responsibility matrices that match real cardholder-data flows ¹.

Key takeaways:

• Security governance must be provable: owned policies, approvals, reviews, and exception handling ¹.
• Third-party oversight is about defined PCI DSS responsibility boundaries with each TPSP, backed by contract language and evidence ¹.
• Auditors will test artifacts and operation, not intent. Keep a living responsibility matrix tied to in-scope services ¹.

“Security governance and third-party oversight” becomes a problem during PCI scoping and assessment because it is easy to say “the provider handles it,” and hard to prove exactly what “it” is. PCI DSS 4.0 is explicit that you must maintain policy governance and manage TPSP responsibilities ¹. That means you need two things working together: (1) security policies that are owned, approved, reviewed, communicated, and enforced; and (2) a third-party accountability model that clearly assigns PCI DSS control responsibilities between your organization and each TPSP involved in payment processing or connected systems.

For a Compliance Officer, CCO, or GRC lead, the fastest path is to turn the requirement into a small set of artifacts that map directly to day-to-day operations: a policy governance standard, a current inventory of TPSPs in scope for card data, and a responsibility matrix per TPSP (or per service) that you can hand to your QSA (or internal audit) without rewrites. If you run this as a documentation-only exercise, you will fail in testing because operational teams will behave differently than the documents describe. The goal is alignment: real responsibilities, written down, contract-backed, and evidenced.

Regulatory text

PCI DSS v4.0 excerpt (PCI-06): “Maintain policy governance and manage TPSP responsibilities.” ¹

What the operator must do:
You must (a) run a formal governance process for information security policies relevant to the cardholder data environment (CDE) and connected systems, and (b) actively manage third-party service provider (TPSP) responsibilities so there is no ambiguity about which PCI DSS controls are performed by your organization and which are performed by the TPSP ¹. The assessor expectation is practical: you can show approved policies, show they are maintained, and show clear responsibility boundaries and oversight for TPSPs that touch or impact cardholder data.

Plain-English interpretation (what this requirement “really means”)

• Governance: Security policies cannot be stale PDFs. They need a named owner, an approval path, and a review/update mechanism that tracks changes and exceptions.
• Third-party oversight: If any third party stores, processes, transmits, or can affect the security of cardholder data systems, you must document the shared-responsibility line and manage it over time ¹. “We outsource payments” does not outsource accountability.

Who it applies to

In scope entities: Merchants and service providers subject to PCI DSS 4.0 ¹.

Operational contexts where it triggers immediately:

• You use a payment processor, gateway, tokenization provider, e-commerce platform, managed hosting, managed firewall, SOC/MDR provider, helpdesk with privileged access, or cloud provider that touches CDE systems or connected systems.
• You have internal shared services (central IT, IAM, network, endpoint teams) that administer CDE components. Treat them like internal third parties for responsibility clarity.
• You rely on SaaS tooling used in CDE administration (ticketing, monitoring, secrets management). Even if it does not store card data, it can affect security outcomes.

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

Use this sequence to operationalize the security governance and third-party oversight requirement quickly.

Step 1: Establish policy governance mechanics (make it auditable)

1. Create a policy governance standard that defines: policy hierarchy, required sections, approval authority, review triggers, exception process, and where policies are published.
2. Assign policy owners for each security domain relevant to PCI (e.g., access control, network security, vulnerability management, incident response, third-party risk). Owners must be individuals, not teams.
3. Implement a review and change process (ticket + approval workflow). Tie policy changes to a change record so you can show “why” and “who approved.”
4. Set up an exception process with time-bound exceptions, compensating controls, approval, and periodic re-validation. Auditors routinely ask how you handle “policy says X, reality is Y.”

Operator tip: Most assessment friction comes from policies that read well but don’t match how engineering actually operates. Run a short “policy-to-practice walkthrough” with system owners before you finalize.

Step 2: Build your TPSP inventory for payment and connected systems

1. List all third parties involved in payment acceptance and CDE operations. Include outsourcing, managed services, SaaS, contractors, and consulting firms with admin access.
2. Record what each TPSP does (stores/processes/transmits card data, provides security services, hosts systems, provides admin tooling).
3. Map each TPSP to in-scope components and data flows. You cannot assign responsibility accurately without knowing what the TPSP touches.

Minimum fields to capture:

• TPSP legal name, service name, business owner
• Systems/data touched, access type (network, admin, application)
• Contract start/end, renewal date
• Compliance artifacts available (e.g., AOC) if applicable
• Internal control owner for the relationship

Step 3: Create TPSP responsibility matrices (the deliverable auditors want)

1. For each TPSP, document responsibility boundaries. Use a matrix format that maps: PCI DSS control area → responsible party (You / TPSP / Shared) → evidence source.
2. For “Shared,” define the split. Example: TPSP manages WAF configuration baseline, you manage rule tuning and alert triage. “Shared” without a split is treated as undefined.
3. Tie the matrix to contract language. If the matrix says the TPSP patches OS, the contract/SOW must support that claim.
4. Define oversight checks for TPSP-owned controls. Oversight can include periodic attestations, service reviews, access reviews, incident notifications, and evidence requests ¹.

Practical matrix structure (recommended):

Area	Responsibility	How you prove it	Review owner
Secure configuration / hardening	TPSP or Shared	Contract/SOW + TPSP attestation + your config review results	Security engineering
Logging and monitoring	Shared	SIEM data flow diagram + alert runbooks + tickets	SOC lead
Vulnerability management	Shared	Scan reports + patch SLAs + exception tickets	VM lead
Incident response	Shared	IR addendum in contract + notification process + tabletop record	IR lead

Step 4: Operationalize oversight (make it routine, not annual)

1. Add TPSP reviews to your governance calendar. Align them to renewals and major service changes.
2. Run access governance for TPSPs with privileged access: onboarding approvals, periodic reviews, and immediate removal upon role change.
3. Monitor TPSP performance against security obligations: security incidents, SLA breaches that affect security, missed evidence deliveries.
4. Test the “shared controls”. If you claim the TPSP monitors logs but your team never reviews alerts, that is a control failure in practice.

Step 5: Prep for assessment testing

1. Create an “assessor packet” per TPSP: contract excerpts, responsibility matrix, and latest oversight evidence.
2. Reconcile scoping: verify the TPSP list matches your CDE diagrams and system inventory.
3. Run interviews with relationship owners and control owners so responses are consistent with the matrix.

Where Daydream fits naturally: Daydream is useful here as a workflow system of record for TPSP inventories, responsibility matrices, evidence collection, and renewal-driven oversight tasks. The requirement is governance-heavy; manual trackers fail because they drift from reality.

Required evidence and artifacts to retain

Keep artifacts in a controlled repository with version history.

Governance artifacts

• Policy governance standard (owner, approval authority, review triggers)
• Current security policies relevant to CDE and connected systems
• Policy approval records (sign-offs) and revision history
• Exception register (approved exceptions, compensating controls, expiry dates)
• Evidence of communication/training where applicable (e.g., acknowledgment)

Third-party oversight artifacts

• TPSP inventory for in-scope services
• TPSP responsibility matrix per TPSP/service
• Contracts/SOWs with security responsibilities and audit/notification clauses
• Oversight records: meeting notes, evidence requests, attestations, remediation tracking
• Offboarding/access removal evidence for TPSP personnel with access

Common exam/audit questions and hangups

Expect questions like:

• “Show me the list of TPSPs that touch the CDE or connected systems. How do you know it’s complete?”
• “Where is the shared responsibility documented for your payment processor and hosting provider?”
• “Which controls are you relying on the TPSP to perform, and what evidence did you obtain?”
• “Policies say X. Show me the operational proof that teams follow X.”
• “How do you track policy exceptions and verify compensating controls?”

Hangup pattern: “We have the provider’s documents” without a mapped responsibility model. Assessors want your accountability model, not a folder of PDFs.

Frequent implementation mistakes (and how to avoid them)

1. Mistake: One generic ‘vendor management policy’ for everything.
   Fix: Maintain TPSP responsibility matrices tied to each in-scope service and data flow ¹.

2. Mistake: “Shared” used as a placeholder.
   Fix: Split shared controls into explicit tasks and evidence owners.

3. Mistake: Contracts don’t match the matrix.
   Fix: Update SOW language at renewal, then update the matrix. If legal cannot change terms, adjust the matrix to reflect reality and add compensating oversight.

4. Mistake: Governance exists only at policy creation time.
   Fix: Run a governance cadence: reviews, exceptions, change control, and periodic TPSP oversight records.

5. Mistake: Forgetting “connected systems” and admin tooling.
   Fix: Include third parties that administer, monitor, or provide identity tooling for CDE systems, even if they never store card data.

Enforcement context and risk implications

No public enforcement cases were provided in the source catalog for this requirement. Practically, weak governance and unclear TPSP responsibilities increase the likelihood of control gaps during incidents and increase assessment findings because auditors cannot confirm who performs required PCI DSS activities ¹. Treat this as a reliability requirement: if you cannot prove ownership and oversight, you cannot prove compliance.

Practical 30/60/90-day execution plan

First 30 days: Establish the minimum viable governance + TPSP map

• Stand up policy governance standard, name policy owners, define approval workflow.
• Build the in-scope TPSP inventory focused on payment processing and CDE operations.
• Identify the top TPSPs where responsibilities are unclear (usually payment processor, hosting/cloud, managed security).
• Draft the first responsibility matrices for those TPSPs and validate with engineering and procurement.

Days 31–60: Close documentation-to-reality gaps

• Reconcile responsibility matrices with contracts/SOWs; create a contract gap list for renewal updates.
• Implement the exception register and begin capturing live exceptions (don’t backfill everything).
• Define oversight checks per TPSP (what evidence you request, who reviews it, where it is stored).
• Pilot an “assessor packet” for one TPSP end-to-end.

Days 61–90: Operationalize and make it repeatable

• Expand responsibility matrices to all in-scope TPSPs.
• Put TPSP oversight on a governance calendar tied to renewals and major changes.
• Train relationship owners on how to run TPSP reviews and how to respond to assessor questions.
• Run an internal readiness review: pick two TPSPs and test whether you can produce evidence within a short window.

Frequently Asked Questions

Do I need a responsibility matrix for every third party, or only for payment providers?

Focus on TPSPs that store, process, transmit cardholder data, or can impact the security of CDE and connected systems ¹. Start with payment processors and hosting/managed service providers, then expand to admin tooling and contractors with privileged access.

What’s the difference between a TPSP inventory and a responsibility matrix?

The inventory is the authoritative list of third parties and what services they provide. The responsibility matrix assigns who performs which PCI DSS responsibilities (you, the TPSP, or shared) and how you prove it ¹.

Can I rely on a third party’s Attestation of Compliance (AOC) instead of doing oversight?

An AOC can support your due diligence, but you still need to define responsibility boundaries and retain evidence that you manage the relationship and the shared control model ¹. Your assessor will test your governance artifacts, not only the TPSP’s.

How do I handle “shared” responsibilities without creating a massive spreadsheet?

Keep the matrix compact by mapping control areas to specific operational tasks and naming an evidence source for each. If the split cannot be explained in a sentence, break it into two rows and assign each row to one party.

What if procurement won’t change contract language to match PCI responsibilities?

Document the actual operating model in the responsibility matrix, then add compensating oversight steps you control (e.g., evidence requests, access reviews) ¹. Track the contract gap and remediate it at renewal.

Who should own this requirement internally: Security, Compliance, or Procurement?

Compliance/GRC typically owns the governance framework and evidence, Security owns control execution, and Procurement/Vendor Management owns contract mechanics. Assign a single accountable owner for the program and named owners for each artifact so nothing falls between teams.

Related compliance topics

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

Footnotes

1. PCI DSS v4.0