Your quarterly IT bill is paid. Email is humming. Backups are running nightly. Your MSP sends you monthly reports with green checkmarks everywhere. Everything looks perfect—until the compliance auditor walks in.
"Can you show me your NIST 800-53 control documentation?" the auditor asks. You forward the question to your MSP. They respond: "Compliance services are outside the scope of our agreement and available separately for an additional fee."
The audit fails. Remediation costs: $25,000. Delayed contracts: $150,000. Reputation damage: Incalculable. And buried in your MSP contract, page 8, section 4.2: "Customer is solely responsible for regulatory compliance."
This scenario plays out hundreds of times per year across organizations of all sizes. The problem isn't that MSPs are bad at their jobs—they're often excellent at infrastructure management. The problem is a fundamental misunderstanding about what "managed IT services" actually includes when it comes to cybersecurity compliance.
By the end of this article, you'll know exactly what to audit in your MSP's Statement of Work, which compliance gaps are most dangerous, and how to supplement your MSP's capabilities without replacing them. Let's start with a comprehensive security assessment of what MSPs actually do—and what they don't.
MSP vs MSSP: Why the Distinction Matters for Your Liability
The acronyms sound similar, but the difference between MSP and MSSP determines who holds the bag when compliance fails.
MSP (Managed Service Provider)
What they do:
- Keep infrastructure running (servers, networks, endpoints)
- Help desk and user support
- Backup and disaster recovery infrastructure
- Patch management and system updates
- Basic antivirus and firewall configuration
Core value proposition: Uptime, reliability, cost-effective IT operations
Typical cost: $100-200 per user per month
MSSP (Managed Security Service Provider)
What they do:
- 24/7 security monitoring (SIEM, SOC)
- Threat detection and response
- Security incident management
- Vulnerability scanning and penetration testing services
- Advanced threat intelligence
Core value proposition: Threat detection, security operations, incident response
Typical cost: $5,000-20,000+ per month depending on environment size
Neither = Compliance Provider
What's typically NOT included:
- Compliance gap assessments and audits
- Policy and procedure documentation
- Risk assessment and management programs
- Audit evidence collection and presentation
- Regulatory change management
- Third-party vendor risk assessment
- Security awareness training programs
- Governance and strategic security planning
Who typically provides this: Fractional CISO (vCISO), compliance consultants, or in-house security leadership with ongoing security management expertise
The Liability Reality
Most MSP and MSSP contracts explicitly disclaim compliance responsibility. Here's what you'll typically find in the fine print:
- "Customer is solely responsible for regulatory compliance and determining the adequacy of security controls"
- "Services do not constitute legal or compliance advice"
- "Provider makes no representation regarding compliance with any specific regulatory framework"
- "Customer shall indemnify Provider against any compliance-related claims or penalties"
Translation: When your audit fails, your MSP isn't legally liable—you are. Even if their security controls were inadequate for your compliance requirements.
This isn't because MSPs are trying to avoid responsibility—it's because compliance requires strategic oversight and governance expertise that's fundamentally different from infrastructure management. MSPs keep your systems running; compliance advisors ensure those systems meet regulatory requirements. Both are necessary, but neither can replace the other.
Common SOW Gaps That Auditors Exploit
Auditors have seen thousands of MSP contracts. They know exactly where to look for gaps. Here are the four most common areas where "managed services" fall short of compliance requirements:
Gap #1: "Security Monitoring" Without Definition
What Your MSP Means
- Antivirus alert emails
- Firewall logs stored somewhere
- Monitoring tools installed
- Weekly review "as time permits"
- Response during business hours
What Auditors Expect
- SIEM with correlation rules
- 24/7 security operations center
- Defined alert response SLAs
- Threat hunting capabilities
- Incident escalation procedures
Compliance impact: Fails NIST 800-53 SI-4 (Information System Monitoring), ISO 27001 A.12.4.1 (Event Logging), NIS2 Article 21 (Cybersecurity Risk Management)
Gap #2: Excluded Services (Read the Fine Print)
Common exclusions buried in MSP contracts:
- "Security assessments and audits available separately" (Translation: Not included, not budgeted)
- "Customer responsible for compliance documentation and evidence collection" (Translation: We won't help with audits)
- "Incident response limited to 8am-5pm Monday-Friday" (Translation: Ransomware at 6pm Friday? You're on your own until Monday)
- "Security awareness training available as add-on service" (Translation: Your users clicking phishing links isn't our problem)
- "Penetration testing, vulnerability assessments, and security architecture reviews provided on request for additional fees"
These exclusions aren't necessarily unreasonable—many are outside typical MSP capabilities. The problem is that businesses assume "managed security" means comprehensive security. It doesn't. Learn more about business continuity planning services that fill these gaps.
Gap #3: Backup ≠ Business Continuity
Your MSP backs up your data nightly. Great! But can you actually recover from a disaster? Most MSP backup services don't include:
- Contractual RPO/RTO guarantees: "Best effort" isn't acceptable for compliance
- Regular recovery testing: Backups that haven't been tested are just expensive archives
- Business continuity documentation: Who does what when systems are down?
- Disaster recovery runbooks: Step-by-step procedures for various failure scenarios
- Alternative processing site arrangements: Where will you work if your building is inaccessible?
Compliance impact: Fails NIST 800-53 CP-9 (Information System Backup), ISO 27001 A.17.1.2 (Implementing Information Security Continuity), SOC 2 A1.2 (Backup and Recovery)
Gap #4: Patch Management Isn't Risk Management
Your MSP applies patches monthly. But compliance frameworks require much more:
What MSPs Typically Provide:
- Monthly patch deployment
- Basic testing in lab environment
- Rollback if critical failures occur
What Compliance Requires:
- Risk-based prioritization (CVSS scoring)
- Emergency patching procedures (zero-days)
- Vulnerability assessment before/after patching
- Documented change management process
- Exception and compensating control documentation
Patching keeps systems updated. Risk management determines WHICH vulnerabilities pose the greatest threat to YOUR organization and prioritizes remediation accordingly. They're different disciplines.
Red Flag Language in MSP Contracts
Watch for these vague terms that sound comprehensive but legally mean nothing:
- "Best effort basis" = No guaranteed outcomes or SLAs
- "Commercially reasonable" = Undefined standard open to interpretation
- "Within scope" = Scope is defined elsewhere (or not at all)
- "Upon request and additional fees" = Not included, price TBD when you need it
- "Industry standard practices" = Which industry? Which standards? No specificity
Professional MSPs understand these gaps and will work with you to clearly define services. If your MSP resists specificity about security deliverables, that's a red flag. For transparent pricing and clearly defined services, learn more about our pricing.