hardMultiple Choice
CRISC Practice Question: A company calculates the annualized loss…
A company calculates the annualized loss expectancy (ALE) for a server outage as $75,000. The cost to implement a high-availability solution is $200,000 with a lifespan of 5 years and annual maintenance of $10,000. What is the residual risk if the solution reduces outage likelihood by 90%?
⚠ Common exam trap
The trap here is that candidates often mistakenly include the cost of the control (annualized or total) in the residual risk calculation, confusing residual risk (the remaining expected loss) with the net financial benefit or cost of the solution.
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
✓
$7,500
$7,500. The annualized loss expectancy (ALE) before mitigation is $75,000. The high-availability solution reduces outage likelihood by 90%, so the residual ALE is 10% of $75,000 = $7,500. The cost of the solution ($200,000 capital with $10,000 annual maintenance over 5 years) is used to calculate the cost-benefit or net present value, but does not directly affect the residual risk figure, which is purely the remaining expected loss after controls are applied.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
$50,000
Why it's wrong here
$50,000 appears to subtract a $25,000 annualised control cost from the $75,000 ALE, but residual risk depends on the 90% likelihood reduction, giving $7,500. Net-of-control-cost figures are tempting when the question asks whether a control is cost-justified.
- ✓
$7,500
Why this is correct
Reducing outage likelihood by 90% leaves 10% of the original $75,000 ALE, giving $7,500 residual risk. This satisfies the stem's requirement to quantify risk remaining after the high-availability control, correctly applying the likelihood reduction to the ALE rather than subtracting implementation costs, which belong in a separate cost-benefit calculation.
- ✗
$42,500
Why it's wrong here
$42,500 misreads the residual as 90% of the original ALE rather than the 10% that remains after the 90% likelihood reduction. Multiplying ALE by the reduction percentage is tempting when the stem asks how much loss the control prevents, not what exposure survives it.
- ✗
$57,500
Why it's wrong here
$57,500 subtracts only the $17,500 annualised control cost from the $75,000 ALE, treating residual risk as ALE minus control cost. That arithmetic fits a total-cost-of-ownership comparison, not a likelihood reduction, which leaves $7,500 of residual risk.
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Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
This CRISC 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 CRISC exam.