Quick Answer
The answer is risk mitigation by implementing controls to fix the vulnerability. This is correct because the annual loss expectancy (ALE) of $600,000—calculated as the $2 million potential loss multiplied by the 30% annual probability—exceeds the $500,000 remediation cost, making the cost-benefit analysis for risk treatment decision clearly favor mitigation over other options. On the Certified Information Security Manager CISM exam, this scenario tests your ability to apply quantitative risk analysis to compare the cost of a control against the expected loss, a core concept in the Risk Management domain. A common trap is choosing risk acceptance when the math shows mitigation is cheaper, or mistakenly selecting risk transfer without considering that insurance premiums often exceed the ALE. Memory tip: if the ALE is greater than the control cost, mitigate; if less, accept or transfer.
This CISM practice question tests your understanding of information security risk management. Compare every option against the stated constraints before choosing — the best answer satisfies all requirements, not just the most obvious one. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
During a risk assessment, an organization identifies that a legacy system processes credit card data and has a high likelihood of being exploited. The cost to remediate the vulnerability is $500,000, while the potential loss from a breach is $2 million with a 30% annual probability. What is the most appropriate risk treatment decision based on this information?
Risk mitigation by implementing controls to fix the vulnerability
Remediation cost less than ALE.
Risk transfer by purchasing cyber insurance
Why wrong: Insurance premiums may be high and not cost-effective.
Risk acceptance because the probability is low
Why wrong: Probability is 30%, not low, and ALE exceeds remediation cost.
Risk avoidance by decommissioning the legacy system
Why wrong: Overly drastic when mitigation is possible.
Answer choices
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
Risk mitigation by implementing controls to fix the vulnerability
Option C is correct because the annual loss expectancy (ALE) is $2,000,000 × 0.30 = $600,000, which exceeds the remediation cost of $500,000, making risk mitigation cost-effective. Option A is wrong because acceptance would leave the risk unaddressed when mitigation is cheaper than the expected loss. Option B is wrong because transferring would involve insurance premiums that likely exceed the expected loss. Option D is wrong because avoidance (removing the system) is more drastic and may not be necessary.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
For each option: why learners choose it and why it is or isn't the right answer here.
Risk mitigation by implementing controls to fix the vulnerability
Why this is correct
Remediation cost less than ALE.
Related concept
Read the scenario before looking for a memorised answer.
Risk transfer by purchasing cyber insurance
Why it's wrong here
Insurance premiums may be high and not cost-effective.
Risk acceptance because the probability is low
Why it's wrong here
Probability is 30%, not low, and ALE exceeds remediation cost.
Risk avoidance by decommissioning the legacy system
Why it's wrong here
Overly drastic when mitigation is possible.
Common exam traps
Many certification questions include familiar terms but test a specific constraint. Read the exact wording before choosing an answer that is generally true but wrong for this case.
Detailed technical explanation
This question should be treated as a scenario, not a definition check. Identify the problem, the constraint and the best action. Then compare each option against those facts.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
A practitioner preparing for the CISM exam encounters this exact type of scenario on the job. The correct answer here is not the most general option — it is the best answer for the specific constraint described. Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option. Real exam questions reward reading the full scenario before eliminating options, because the constraint defines which answer fits.
What to study next
Identify which CISM exam domain this question belongs to, then review the specific concept being tested. Practise related questions in that domain and focus on understanding why each wrong answer is tempting — not just why the correct answer is right.
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FAQ
Information Security Risk Management — This question tests Information Security Risk Management — Read the scenario before looking for a memorised answer..
The correct answer is: Risk mitigation by implementing controls to fix the vulnerability — Option C is correct because the annual loss expectancy (ALE) is $2,000,000 × 0.30 = $600,000, which exceeds the remediation cost of $500,000, making risk mitigation cost-effective. Option A is wrong because acceptance would leave the risk unaddressed when mitigation is cheaper than the expected loss. Option B is wrong because transferring would involve insurance premiums that likely exceed the expected loss. Option D is wrong because avoidance (removing the system) is more drastic and may not be necessary.
Identify which CISM exam domain this question belongs to, then review the specific concept being tested. Practise related questions in that domain and focus on understanding why each wrong answer is tempting — not just why the correct answer is right.
Read the scenario before looking for a memorised answer.
About these practice questions
Courseiva creates original exam-style practice questions with explanations and wrong-answer analysis. It does not publish real exam questions, exam dumps, or protected exam content. Learn why practice questions differ from exam dumps →
Same concept, more angles
These questions test the same concept from different angles. Work through them to make sure you can recognise it however the exam phrases it.
Variation 1. During a risk assessment, an organization identifies that its legacy payment system has a high likelihood of exploitation due to unpatched vulnerabilities. The system is critical for daily operations. Which risk treatment option should the organization PRIMARILY consider?
mediumWhy A: Option B is correct because mitigation through compensating controls reduces risk while maintaining operations. Option A is wrong because avoidance would mean discontinuing the system, which is not feasible. Option C is wrong because transfer shifts financial risk but not operational risk. Option D is wrong because acceptance without action is inappropriate for high risk.
Last reviewed: Jun 24, 2026
This CISM practice question is part of Courseiva's free ISACA certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the CISM exam.
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