Due Care vs Due Diligence: What Is the Difference?

Key Takeaway

Due care involves ongoing efforts to maintain cybersecurity measures and protect systems, while due diligence focuses on investigating and assessing risks associated with third-party vendors and business decisions before entering agreements.

Key Terms

Due Care: The ongoing effort to maintain cybersecurity measures and protect data systems through proactive security practices.

Due Diligence: The comprehensive investigation process to assess cybersecurity risks associated with third-party vendors or business decisions.

Reasonable Care: The standard of behavior expected to protect information systems using prudent precautions under similar circumstances.

Vendor Risk Management (VRM): The systematic approach to identifying, assessing, and mitigating risks from third-party service providers.

Risk Assessment: The systematic evaluation of potential cybersecurity threats and vulnerabilities facing an organization.

Introduction

Understanding the distinction between due care and due diligence is essential for effective cybersecurity risk management. While both concepts are critical for establishing robust security postures, they differ significantly in application and focus.

Key Insight: Organizations implementing both due care and due diligence frameworks reduce cybersecurity incidents by up to 65% compared to those focusing on only one approach.

Due care refers to habitual actions, policies, and procedures employed to maintain safety and avoid risks consistently. Due diligence involves taking necessary investigative steps to avoid harm in specific situations, particularly when evaluating third-party relationships.

What Is Due Care in Cybersecurity?

Due Care Definition: Due care refers to the effort made by organizations to avoid harm through proactive cybersecurity measures. It represents the level of judgment, attention, and prudence that reasonable organizations exercise under particular circumstances to maintain security standards.

In cybersecurity contexts, due care encompasses ongoing efforts organizations make to keep data and systems secure. This includes implementing appropriate security measures, regularly updating software to patch vulnerabilities, and ensuring employee training in security best practices.

Essential Due Care Practices

Due care in cybersecurity requires continuous commitment to maintaining and improving security measures:

Core Due Care Activities:

Network Monitoring and Protection: Implement advanced threat detection systems and real-time security monitoring to identify malicious activity promptly
Employee Cybersecurity Training: Provide comprehensive awareness training covering phishing, password management, and secure internet practices
Policy Implementation: Develop and maintain clear cybersecurity policies based on thorough risk assessments and industry standards
Data Backup Management: Automate backup processes with secure on-site and off-site storage, including regular restoration testing
Wi-Fi Network Security: Secure networks using strong encryption (WPA3), hidden SSIDs, and regular password changes
Regulatory Compliance: Stay informed about cybersecurity regulations and standards relevant to your industry
Incident Response Planning: Prepare comprehensive incident response plans with regular testing and updates

Due care represents proactive security measures focused on preventing incidents through consistent maintenance and adherence to recognized security standards.

What Is Due Diligence in Cybersecurity?

Due Diligence Definition: Due diligence is the comprehensive investigation process organizations undertake before entering agreements or making decisions. In cybersecurity, this involves researching and understanding risks associated with third-party vendors to ensure they meet security standards.

Due diligence in cybersecurity refers to steps taken to assess security postures and practices of external entities. This includes evaluating potential risks, verifying compliance with standards, and continuously monitoring vendor performance and security protocol adherence.

Key Due Diligence Components

Effective due diligence requires systematic evaluation of third-party cybersecurity risks:

1. Vendor Risk Management Policy Development
Document decision-making processes for vendor selection, including cybersecurity practice verification, certification requirements, and ongoing monitoring procedures.

2. Third-Party Vendor Monitoring
Conduct baseline security assessments, implement continuous monitoring systems, and perform independent audits or penetration testing as needed.

3. Annual Security Audits Examine I
T systems, configurations, technologies, and compliance with regulations using qualified cybersecurity professionals to identify vulnerabilities.

4. Regulatory Compliance Updates
Regularly update due diligence practices to comply with evolving laws like GDPR, HIPAA, CCPA, and industry-specific standards.

Key Differences Between Due Care and Due Diligence

Aspect	Due Care	Due Diligence
Focus	Internal security maintenance	External risk assessment
Timing	Ongoing, continuous efforts	Pre-decision investigation
Scope	Organizational security posture	Third-party vendor evaluation
Purpose	Prevent security incidents	Assess partnership risks
Activities	Training, monitoring, policy enforcement	Audits, assessments, vendor evaluation
Responsibility	Internal security teams	Risk management and procurement teams

Due care focuses on proactive internal security measures, while due diligence emphasizes investigative external risk assessment. Both concepts work together to create comprehensive cybersecurity risk management strategies.

Why Are Both Due Care and Due Diligence Important in Cybersecurity?

Due care and due diligence collectively contribute to proactive and responsible cyber risk management approaches. Their combined implementation addresses both internal security maintenance and external risk evaluation requirements.

Legal and Regulatory Benefits

Both principles are often required by various regulations and laws. Organizations failing to demonstrate due care and diligence face legal repercussions including fines, penalties, and potential liability for data breaches.

Regulatory frameworks like GDPR, HIPAA, and industry standards require documented evidence of reasonable security measures and thorough vendor risk assessments.

Impact on Reputation and Trust

Customers and partners trust organizations demonstrating serious cybersecurity commitments. Due care and diligence provide visible signs of organizational dedication to protecting data and maintaining security standards.

Organizations with strong due care and diligence practices experience improved customer retention, enhanced partner relationships, and competitive advantages in security-conscious markets.

Risk Management Benefits

Proactive risk management through due care and diligence helps prevent security incidents and reduces impact when incidents occur. This approach minimizes downtime, financial losses, and reputation damage.

Due diligence provides valuable insights for strategic decision-making, particularly concerning mergers, acquisitions, or partnership agreements, enabling informed risk assessment of business relationships.

Best Practices for Implementing Due Care and Due Diligence

Embedding due care and diligence into cybersecurity policies requires systematic approaches and continuous commitment:

Implementation Best Practices:

Establish Clear Policies: Develop documented policies outlining organizational commitment to due care and diligence with specific guidelines for assessments and training
Conduct Regular Risk Assessments: Implement continuous risk assessment processes that adapt to emerging threats and changing organizational circumstances
Implement Continuous Monitoring: Deploy comprehensive monitoring systems to detect anomalies and threats quickly while regularly reviewing security measure effectiveness
Develop Vendor Management Programs: Create systematic vendor management including due diligence checks before onboarding and continuous monitoring of existing vendors
Foster Security Culture: Provide regular employee training on cybersecurity threats and best practices while ensuring understanding of individual security roles
Maintain Legal Awareness: Stay informed about cybersecurity laws and regulations affecting your industry with compliant policies and practices
Document Everything: Keep detailed records of cybersecurity efforts including risk assessments, vendor evaluations, training sessions, and incident responses

Incident Response Planning

Robust incident response plans should outline effective security incident responses, minimizing damage and enabling quick recovery. Organizations must regularly test and update plans to ensure effectiveness when needed.

Incident response planning demonstrates both due care through preparedness and due diligence through thorough planning processes. Documentation provides evidence of reasonable security efforts during legal or regulatory reviews.

Frequently Asked Questions

Q: What is the main difference between due care and due diligence in cybersecurity?

A: Due care focuses on ongoing internal security maintenance and proactive measures to protect systems, while due diligence involves comprehensive investigation and assessment of external risks, particularly from third-party vendors, before making business decisions.

Q: How often should organizations conduct due diligence assessments?

A: Organizations should conduct initial due diligence before onboarding vendors, annual comprehensive assessments for all vendors, and quarterly reviews for high-risk vendors. Continuous monitoring should occur for vendors with access to sensitive data or critical systems.

Q: What are the legal consequences of failing to demonstrate due care?

A: Failing to demonstrate due care can result in regulatory fines, increased liability for data breaches, legal penalties, and potential lawsuits from affected parties. Organizations may also face increased insurance premiums and regulatory scrutiny.

Q: Can small organizations implement both due care and due diligence effectively?

A: Yes, small organizations can implement both concepts by starting with basic security policies, conducting simple vendor assessments, using automated tools for monitoring, and gradually expanding their programs as they grow.

Q: What documentation is needed to prove due care and due diligence?

A: Essential documentation includes security policies, risk assessments, vendor evaluation reports, training records, incident response plans, audit results, monitoring logs, and evidence of security control implementation and maintenance.

Q: How do due care and due diligence relate to regulatory compliance?

A: Both concepts are fundamental to regulatory compliance, with many frameworks like GDPR, HIPAA, and SOX requiring evidence of reasonable security measures (due care) and thorough risk assessments (due diligence) to avoid penalties and maintain compliance status.

This document provides comprehensive guidance on implementing due care and due diligence in cybersecurity risk management. For organizations seeking to enhance their security posture, both concepts should be integrated into overall cybersecurity strategies.