CAS-004 Governance, Risk, and Compliance Practice Question
An organization is using the FAIR framework to quantify risk. The analyst estimates the probable loss event frequency (LEF) as 4 per year and the probable loss magnitude (LM) as $25,000 per event. What is the annualized loss expectancy (ALE) under FAIR?
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
$100,000
In FAIR, ALE = LEF × LM. Here, LEF=4 and LM=$25,000, so ALE = 4 × $25,000 = $100,000.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
$6,250
Why it's wrong here
Incorrect division.
- ✗
$125,000
Why it's wrong here
Incorrect derivation.
- ✓
$100,000
Why this is correct
Correct calculation.
- ✗
$25,000
Why it's wrong here
That is the loss per event.
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