Which of the following threats associated with third-party management is BEST addressed through the establishment of a service level agreement (SLA)?

A service level agreement (SLA) is a formal document that outlines the expectations and responsibilities between a service provider and a client. The purpose of an SLA is to ensure both parties have a clear understanding of the services to be delivered and the expected standards regarding performance, availability, and responsibilities in the event of issues affecting service delivery.

When it comes to financial loss from service interruption, an SLA is particularly relevant because it typically includes terms that specify the recourse clients have if the provider fails to meet agreed-upon service levels. This may encompass compensation, credits, or penalties that address the financial impact of service disruptions. By defining these elements within the SLA, organizations can better manage the risk associated with potential financial losses stemming from operational failures on the part of the third-party provider.

In contrast, while other threats are significant, they may not be as effectively mitigated by an SLA. For instance, service interruptions can occur for various reasons that might not directly tie back to breaches of the SLA, such as force majeure events. Similarly, undetected degradations in service performance can be more difficult to quantify and resolve, as SLAs often outline performance metrics but may not address all potential monitoring needs. Lastly, bankruptcy of a third-party organization is a risk that