In the context of network security, which of the following best describes a firewall?

A firewall is best described as a system that monitors and controls network traffic. Its primary function is to establish a barrier between a trusted internal network and untrusted external networks, such as the internet. By implementing predetermined security rules, a firewall can filter incoming and outgoing traffic, blocking unauthorized access while allowing legitimate communications. This monitoring aspect is crucial for protecting networks from various threats, including malware and intrusion attempts, thus maintaining the overall security of the network environment.

The other options, while related to security practices, do not accurately depict the specific function of a firewall. Data encryption is achieved through different technologies focused on securing information, not traffic flow. VPN connections enhance privacy and security over the internet but are not the function of a firewall. Incident reporting refers to documenting and managing security breaches, which falls outside the preventive role of a firewall.