hardMultiple ChoiceObjective-mapped
CRISC Practice Question: A financial institution is assessing the risk of…
A financial institution is assessing the risk of a new real-time payment system. The risk manager calculates that the annualized loss expectancy (ALE) for a potential fraud scenario is $500,000. The cost to implement a fraud detection solution is $200,000 initially with $50,000 annual maintenance. The solution is expected to reduce the ALE by 80%. What is the net benefit of implementing the solution over three years?
⚠ Common exam trap
The trap here is that candidates often forget to include the annual maintenance costs over the full three-year period or mistakenly apply the 80% reduction to the total cost instead of the ALE, leading to incorrect net benefit calculations.
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
✓
$850,000
The net benefit over three years is calculated as the reduction in ALE minus the total cost of the solution. The original ALE is $500,000 per year, and an 80% reduction saves $400,000 annually. Over three years, total savings are $1,200,000. The total cost includes the initial $200,000 plus three years of maintenance at $50,000 each ($150,000), totaling $350,000. Net benefit = $1,200,000 - $350,000 = $850,000.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
$1,000,000
Why it's wrong here
Overestimates benefit by excluding all costs.
- ✗
$950,000
Why it's wrong here
Incorrect calculation of net benefit.
- ✗
$800,000
Why it's wrong here
Ignores annual maintenance costs.
- ✓
$850,000
Why this is correct
Correctly accounts for all costs and benefits.
Go deeper
Related to this question
About these practice questions
This CRISC question is part of Courseiva's 983-question bank — original exam-style content with full explanations and wrong-answer analysis, never real exam questions or exam dumps. Learn why practice questions differ from exam dumps →
JA
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.