This CRISC practice question tests your understanding of it risk assessment. Read the scenario carefully and evaluate each option against the stated constraints before committing to an answer. 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.
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%?
$50,000
Why wrong: This is the annualized control cost, not residual risk.
$7,500
Residual risk is the ALE after control implementation: $75,000 * 0.1 = $7,500.
$42,500
Why wrong: This subtracts control cost from original ALE incorrectly.
$57,500
Why wrong: This is original ALE minus control cost, not residual risk.
Answer choices
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
$7,500
The correct answer is B: $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.
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.
$50,000
Why it's wrong here
This is the annualized control cost, not residual risk.
$7,500
Why this is correct
Residual risk is the ALE after control implementation: $75,000 * 0.1 = $7,500.
Related concept
Read the scenario before looking for a memorised answer.
$42,500
Why it's wrong here
This subtracts control cost from original ALE incorrectly.
$57,500
Why it's wrong here
This is original ALE minus control cost, not residual risk.
Common exam traps
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.
Detailed technical explanation
Residual risk is calculated as the remaining ALE after controls are applied: ALE_post = ALE_pre × (1 - reduction_factor). Here, reduction_factor = 0.9, so residual ALE = $75,000 × 0.1 = $7,500. The cost of the control (TCO) is used in a separate cost-benefit analysis (e.g., ROSI) to determine if the investment is justified, but it does not alter the residual risk value itself. In practice, organizations often compute both residual risk and net benefit to make informed decisions about risk acceptance or further mitigation.
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 CRISC 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
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FAQ
IT Risk Assessment — This question tests IT Risk Assessment — Read the scenario before looking for a memorised answer..
The correct answer is: $7,500 — The correct answer is B: $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.
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
Read the scenario before looking for a memorised answer.
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Last reviewed: Jun 25, 2026
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