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My VPS provider is asking me to have snmp installed on it. My question is why should I do so? and is there any security reasons I should avoid doing so?

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I'm assuming the VPS wants to use it for monitoring the health of your server. Allowing them to do so would help them to be proactive rather than reactive to any problems that arise. However, I suggest you ask them why they want to, since only you can decide if you want them to do it.

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