Vendor Data Handling Questionnaire Template

Your vendors touch most your sensitive data on average. Without visibility into their security practices, you're operating blind.

A Vendor Data Handling Questionnaire captures the technical and procedural controls third parties use to protect your information assets. Unlike generic security questionnaires, this specialized DDQ focuses exclusively on data protection mechanisms—encryption standards, access controls, retention policies, and breach response procedures.

For GRC analysts managing 50+ vendor assessments annually, this template transforms a 4-hour manual review into a 45-minute standardized evaluation. Each question maps to specific regulatory requirements, enabling simultaneous compliance validation across SOC 2, ISO 27001, GDPR, CCPA, and industry-specific frameworks like HIPAA or PCI DSS.

The template serves three critical functions: initial vendor onboarding, annual reassessments, and triggered reviews following security incidents. By standardizing your data handling assessments, you create comparable risk scores across your vendor portfolio, automate control mapping for audit reports, and build an evidence repository that satisfies multiple regulatory examinations.

Core Template Sections

1. Data Inventory and Classification (Questions 1-8)

Start with visibility. Before evaluating controls, you need to understand what data flows to each vendor.

This section captures:

• Data types processed (PII, PHI, financial records, intellectual property)
• Volume estimates (records per month, total storage)
• Geographic locations of processing and storage
• Subprocessor involvement and fourth-party data sharing

Risk scoring tip: Vendors handling regulated data (HIPAA, PCI) automatically inherit a higher base risk score. Volume multipliers apply—processing 1M+ records quarterly triggers enhanced due diligence requirements.

2. Technical Safeguards (Questions 9-24)

Technical controls form your primary defense layer. This section aligns with SOC 2 CC6.1 and ISO 27001 A.10.1:

Encryption Standards

• Data at rest: AES-256 minimum for Tier 1 vendors
• Data in transit: TLS 1.2+ with perfect forward secrecy
• Key management: HSM usage, rotation schedules, escrow procedures

Access Controls

• Authentication methods (MFA requirements by data sensitivity)
• Authorization matrices (role-based vs. attribute-based)
• Privileged access management (PAM) tools and audit trails
• API security (OAuth 2.0, rate limiting, token expiration)

Evidence collection: Request screenshots of encryption configurations, sample audit logs, and penetration test summaries from the last 12 months.

3. Operational Procedures (Questions 25-35)

Process controls determine how consistently technical safeguards operate:

Data Handling Workflows

• Collection minimization practices
• Processing limitations and purpose binding
• Retention schedules by data category
• Secure disposal methods (NIST 800-88 compliance)

Change Management

• Architecture review boards for data flow changes
• Privacy impact assessment triggers
• Customer notification procedures for material changes

Control mapping: These questions directly support GDPR Articles 5, 17, and 25—essential for EU data transfers.

4. Incident Response and Breach Notification (Questions 36-45)

When controls fail, response speed matters:

Detection Capabilities

• SIEM deployment and correlation rules
• Mean time to detect (MTTD) metrics
• Automated alerting thresholds

Response Procedures

• Incident classification matrix
• Escalation paths and contact points
• Customer notification SLAs (regulatory vs. contractual)
• Forensic preservation requirements

Practical benchmark: Tier 1 vendors should demonstrate MTTD under 24 hours and customer notification within 72 hours of confirmation.

Industry-Specific Applications

Financial Services

Add questions addressing:

• GLBA Safeguards Rule requirements (16 CFR Part 314)
• FFIEC examination procedures
• Open banking API security (PSD2 compliance)
• Cryptographic key management for payment data

Healthcare

Expand sections covering:

• HIPAA Security Rule administrative, physical, and technical safeguards
• Minimum necessary standards
• Business Associate Agreement (BAA) alignment
• Medical device data interfaces

Technology/SaaS

Include assessments for:

• Multi-tenant isolation mechanisms
• CI/CD pipeline security
• Infrastructure-as-code scanning
• Customer data portability APIs

Implementation Best Practices

1. Risk-Based Question Selection

Not every vendor needs every question. Create three template tiers:

Tier 1 (Critical): Full 45-question assessment

• Access to production data
• Revenue impact >$1M annually
• Regulatory data processing

Tier 2 (Important): 25-question subset

• Limited data access
• Non-critical business functions
• Standard contractual terms

Tier 3 (Low Risk): 12-question baseline

• No direct data access
• Commoditized services
• Public information only

2. Evidence Integration

Transform answers into auditable proof:

Question Type	Required Evidence	Verification Method
Technical Control	Configuration screenshots	Technical validation
Process Control	Policy documents + audit reports	Document review
Compliance Claim	Certification + attestation letter	Certificate validation
Metric-Based	Dashboard exports + trend data	Statistical analysis

3. Scoring Automation

Build quantitative risk scores:

• Critical controls (encryption, access management): 3x weight
• Important controls (logging, training): 2x weight
• Standard controls (policies, procedures): 1x weight

Automatic flags for:

• Missing evidence = a significant number of score reduction
• Outdated evidence (>12 months) = 25% reduction
• Compensating controls accepted = 10% reduction

Common Implementation Mistakes

1. One-Size-Fits-All Syndrome

Sending identical 200-question DDQs to every vendor guarantees two outcomes: low response rates and unusable data. Customize by vendor tier and data exposure.

2. Evidence Orphaning

Collecting evidence without mapping to controls creates an audit nightmare. Each piece of evidence should link to specific questions, controls, and frameworks.

3. Static Assessments

Data handling practices evolve. Schedule reassessments based on:

• Vendor tier (Tier 1: annual, Tier 2: biennial, Tier 3: triennial)
• Material changes (new data types, geographic expansion)
• Incident triggers (breaches, regulatory actions)

4. Manual Tracking Madness

Spreadsheet-based tracking breaks at ~20 vendors. Implement workflow automation for:

• Assessment scheduling and reminders
• Evidence collection and validation
• Score calculation and trending
• Report generation for audits

5. Framework Tunnel Vision

Assessing only for SOC 2 misses GDPR requirements. Map questions to multiple frameworks simultaneously—one assessment, multiple compliance validations.

Frequently Asked Questions

How long should vendors have to complete the data handling questionnaire?

Tier 1 vendors: 10 business days with pre-populated responses from previous assessments. New vendors: 15 business days. Tier 3: 5 business days for the abbreviated version.

What's the minimum acceptable encryption standard for data at rest?

AES-256 for all Tier 1 vendors and any vendor processing regulated data (HIPAA, PCI, GDPR special categories). AES-128 acceptable for Tier 2/3 vendors with compensating controls.

Should we accept SOC 2 reports instead of questionnaire responses?

SOC 2 Type II reports can pre-answer ~60% of technical control questions. Still require questionnaire completion for operational procedures, incident response details, and your specific data handling requirements.

How do we score vendors who use subprocessors?

Apply the highest risk score in the chain. If your Tier 2 vendor uses a Tier 1 subprocessor for data storage, score the overall relationship as Tier 1. Require subprocessor lists updated quarterly.

What evidence expiration periods should we enforce?

Technical configurations: 6 months. Audit reports/certifications: 12 months. Penetration tests: 12-18 months. Policies: 24 months if no material changes.

Can vendors propose alternative controls?

Yes, but require: (1) documented risk assessment showing equivalency, (2) evidence of control effectiveness, (3) approval from your risk committee for Tier 1 vendors.