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Control 2.7: Vendor and Third-Party Risk Management — Portal Walkthrough

Companion to Control 2.7. Provides portal-driven configuration to inventory third-party connectors, restrict high-risk publishers, govern Copilot Studio plugins/MCP, and stand up ongoing monitoring aligned to the Interagency 2023 Third-Party Guidance, OCC 2013-29, GLBA Safeguards Rule (16 CFR Part 314), FINRA 3110/4511, and SEC 17a-4(f).

Audience and Prerequisites

  • Primary admins: Power Platform Admin, AI Administrator
  • Supporting: Purview Compliance Admin (DLP/audit evidence), Procurement (contract artifacts), Compliance Officer (regulatory sign-off)
  • Tenant prerequisites:
    • Managed Environments enabled for any environment hosting Zone 2 or Zone 3 agents (see Control 2.1)
    • Microsoft Purview Audit (Standard or Premium) enabled for connector and plugin telemetry
    • Established environment-to-zone mapping (Zone 1 / 2 / 3)

Read-only first

All portal steps below are read-only or policy-additive. Do not modify production DLP policies until a documented change ticket and rollback plan exist. UI verified April 2026; portal paths can shift between Power Platform monthly releases.

Part 1 — Build the Connector Inventory (PPAC)

Portal path: Power Platform admin center → Resources → Capacity and Analytics → Power Apps / Power Automate / Copilot Studio.

  1. Sign in to https://admin.powerplatform.microsoft.com as Power Platform Admin.
  2. From the left rail, open Analytics → choose Power Apps, Power Automate, and Copilot Studio in turn.
  3. For each workload, set the time range to the last 30 days and download the connector usage CSVs (per-environment).
  4. From Resources → Connectors, review the Custom connectors and Independent publisher tabs for every Zone 2/3 environment.
  5. Consolidate into a single inventory workbook with the columns below.

Inventory schema (one row per connector × environment)

Field Source Notes
Connector display name Analytics export Use Microsoft canonical name
Connector ID Analytics export Stable identifier for audit
Publisher Connector blade Microsoft / Verified / Independent / Custom
Environment Analytics export Map to Zone 1/2/3
Data classes carried Business owner attestation Customer NPI, MNPI, supervisory data, etc.
Business owner (named individual) Procurement / governance intake Required for Zone 2/3
Risk tier Section "Connector risk tiers" below Drives DLP placement
SOC 2 status Vendor file Date / window / accepted alternative
Contract reference Procurement Contract ID + AI clauses flag
Last reviewed Governance log Refresh per cadence in Part 6

Connector risk tiers

Tier Examples Default DLP placement Reassessment cadence
T1 — Microsoft first-party Dataverse, SharePoint, Teams, M365 Graph Business Annual
T2 — Certified third-party Salesforce, ServiceNow, SAP, Workday Business with restrictions Semi-annual
T3 — Independent publisher Community connectors Non-business or Blocked by default Quarterly
T4 — Custom (org-built) Internal APIs Non-business unless reviewed Quarterly
T5 — External AI / LLM providers Azure OpenAI, third-party LLM endpoints, MCP tool servers Restricted; explicit allowlist Quarterly

Part 2 — Configure DLP and Connector Policies

Portal path: Power Platform admin center → Policies → Data policies.

  1. Open Data policies and select (or create) the policy that covers your Zone 2/3 environments.
  2. On Prebuilt connectors, place every inventoried connector into Business, Non-business, or Blocked per its risk tier. Independent-publisher and unreviewed custom connectors should land in Blocked by default.
  3. On Custom connectors, set the default behavior to Blocked and define explicit URL patterns for approved internal APIs only.
  4. On Connector configurations (Advanced Connector Policies — see Control 1.4), restrict high-risk actions (e.g., HTTP, file system writes, send-as) where the connector vendor supports it.
  5. Apply the policy to the targeted environments (or to All environments with explicit exclusions).
  6. Document the change in your change-management system before publishing; capture screenshots of the final connector classification page as evidence.

Policy precedence

Power Platform applies the most restrictive matching policy across environment-, security-group-, and tenant-scoped policies. Validate effective policy after publish using the Policy effects view.

Part 3 — Govern Copilot Studio Plugins, Generative Actions, and MCP

Portal path: Copilot Studio (https://copilotstudio.microsoft.com) → select agent → Settings → Generative AI and Tools / Plugins.

  1. As AI Administrator, open each Zone 2/3 agent and review the Tools / Plugins tab.
  2. Confirm only allowlisted tools are present. Remove or disable independent-publisher or community plugins lacking a documented vendor assessment.
  3. For MCP (Model Context Protocol) tool servers — which are non-Microsoft by definition — require:
    • Documented vendor record in the inventory (Tier T5)
    • Network egress through approved gateways only
    • Logging of every tool call with request/response metadata (see verification playbook)
  4. In Settings → Generative AI, review the selected model provider. Native Copilot Studio model options (Microsoft, Azure OpenAI, Anthropic Claude, OpenAI GPT-5) inherit Microsoft platform terms; non-native LLM endpoints require a direct vendor agreement and Tier T5 assessment.
  5. In the Power Platform admin center → Settings → Generative AI, confirm tenant-level controls for cross-geo data movement, customer-managed keys, and external model usage match the tenant's vendor risk decisions.

Anthropic and OpenAI native integration

With Anthropic Claude and OpenAI GPT-5 generally available as native Copilot Studio model providers (April 2026), reclassify those vendors as Microsoft-mediated platform services in the inventory. The direct vendor relationship is replaced by Microsoft's data-handling commitments, but the underlying model risk (Control 2.6) and supply-chain risk (this control) still apply.

Part 4 — Vendor Due Diligence Pack

For every Tier T2–T5 vendor, collect and store under records management:

  • SOC 2 Type II report (within validity window) or accepted alternative (ISO 27001 + bridge letter, FedRAMP Moderate/High, or independent assessment)
  • SOC 1 Type II where the vendor influences SOX-relevant processes
  • Penetration test summary (within last 12 months)
  • Subprocessor list and notification mechanism
  • Data residency and cross-border transfer commitments
  • Incident response plan and breach notification SLA
  • Business continuity / disaster recovery test results
  • For AI/LLM vendors only: model card(s), training-data governance summary, evaluation/red-team results, and explicit no-training-on-customer-data attestation

The Microsoft Service Trust Portal (https://servicetrust.microsoft.com) is the canonical source for Microsoft first-party attestations covering Power Platform, Copilot Studio, Microsoft 365 Copilot, and Azure OpenAI.

Part 5 — Contract Clauses for AI / Connector Vendors

Procurement should confirm the following clauses are present (or risk-accepted with sign-off) for every Tier T2–T5 vendor:

Clause Minimum standard
Material model change notification At least 30 days advance notice
No training on customer data Explicit prohibition without written consent
AI incident notification Within 24 hours for incidents impacting integrity, confidentiality, or availability
Audit rights Annual right to audit or accept SOC 2 Type II in lieu
Data residency Named region(s); written approval required to change
Subprocessor approval Notification with right to object
Records-handling commitments Where vendor stores books-and-records per SEC 17a-4 / FINRA 4511
Exit assistance Data return / destruction within defined window post-termination

Part 6 — Ongoing Monitoring Cadence

Cadence Activity Owner
Continuous (automated) Connector telemetry, DLP exception alerts, vendor security advisory feeds Security Team
Weekly Microsoft 365 Message Center review for Power Platform / Copilot Studio Power Platform Admin
Monthly Inventory delta review (new connectors, new plugins, new MCP endpoints) AI Governance Lead
Quarterly Tier T3–T5 reassessment; vendor scorecard refresh; transitive data-flow map review Vendor Risk + Security
Semi-annual Tier T2 reassessment; SOC 2 currency check Procurement
Annual Tier T1 reassessment; full policy review; exit-plan tabletop for Zone 3 critical vendors AI Governance Lead + Compliance

Evidence to Capture for Audit

  • Inventory workbook export (with timestamps and reviewer initials)
  • DLP policy export (Power Platform admin center → policy → Export)
  • Copilot Studio agent settings screenshots (model provider, plugins/tools list)
  • Vendor due diligence pack per Tier T2–T5 vendor
  • Quarterly vendor risk report delivered to governance committee
  • Records-management log proving retention per FINRA 4511 / SEC 17a-4 schedules

Back to Control 2.7 · PowerShell Setup · Verification & Testing · Troubleshooting

Updated: April 2026 | Version: v1.4.0 | UI Verification Status: Current