SY0-701 Annualized Loss Expectancy (ALE) Practice Question
Exhibit
Risk register excerpt for the public payment API Current estimated annual loss expectancy without additional controls: $260,000 Option A: Tighten change approvals and require admin MFA Control cost: $40,000 Residual annual loss expectancy: $160,000 Option B: Implement active-active failover between regions Control cost: $120,000 Residual annual loss expectancy: $40,000 Option C: Purchase cyber insurance for the service Control cost: $25,000 Residual annual loss expectancy: $220,000 Option D: Add manual fallback processing and user training Control cost: $10,000 Residual annual loss expectancy: $210,000
Based on the exhibit, which control option provides the greatest net annual financial benefit for the organization?
⚠ Common exam trap
Candidates often choose the option with the lowest implementation cost or the highest loss reduction without calculating the net benefit, failing to recognize that the greatest net financial benefit comes from the optimal balance between cost and loss reduction. For example, Option B's loss reduction of $220,000 minus cost of $120,000 yields $100,000 net benefit, surpassing other options.
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
✓
Option B, because its large reduction in annual loss outweighs the higher implementation cost.
It provides the greatest net annual financial benefit. With a loss reduction of $220,000 and an implementation cost of $120,000, the net benefit is $100,000, which is higher than any other option. This demonstrates that a larger upfront investment can be justified when the reduction in annualized loss expectancy (ALE) significantly outweighs the control cost.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Option A, because it reduces loss enough to justify the control cost better than the smaller controls.
Why it's wrong here
Effective, but its savings are smaller than Option B's savings once cost is included.
- ✓
Option B, because its large reduction in annual loss outweighs the higher implementation cost.
Why this is correct
Reduces annual loss expectancy from $260,000 to $40,000, creating $220,000 in annual savings before cost. After subtracting the $120,000 control cost, it still delivers the highest net benefit among the choices. Quantitative risk decisions should compare expected loss reduction against implementation cost, and this option provides the strongest financial return.
- ✗
Option C, because transferring the risk is always cheaper than engineering a technical fix.
Why it's wrong here
Insurance transfers some financial impact, but the residual annual loss remains high and the overall benefit is much lower.
- ✗
Option D, because low upfront cost makes it the most economical option regardless of residual loss.
Why it's wrong here
Cheap, but it barely reduces the expected annual loss, so its net benefit is far below the better controls.
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JA
Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
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