Quick Answer
The answer is $850,000, which represents the net benefit of implementing the fraud detection solution over three years. This is correct because the net benefit is derived from a cost benefit analysis with ALE reduction over three years: the original annualized loss expectancy of $500,000 is reduced by 80%, saving $400,000 per year, for total savings of $1,200,000; subtracting the total implementation cost of $350,000 (initial $200,000 plus three years of $50,000 maintenance) yields $850,000. On the CRISC exam, this type of calculation tests your ability to apply quantitative risk analysis and compare mitigation costs against residual risk, often appearing in domain two—Risk Response. A common trap is forgetting to include annual maintenance costs or miscalculating the multi-year savings period. Memory tip: think “Save 80% of ALE, subtract all costs over the full timeline.”
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 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?
$1,000,000
Why wrong: Overestimates benefit by excluding all costs.
$950,000
Why wrong: Incorrect calculation of net benefit.
$800,000
Why wrong: Ignores annual maintenance costs.
$850,000
Correctly accounts for all costs and benefits.
Answer choices
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 correct answer is D because 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.
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.
$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.
Related concept
Read the scenario before looking for a memorised answer.
Common exam traps
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.
Detailed technical explanation
The Annualized Loss Expectancy (ALE) is a key risk quantification metric in the FAIR (Factor Analysis of Information Risk) model, calculated as Single Loss Expectancy (SLE) times Annualized Rate of Occurrence (ARO). In this scenario, the fraud detection solution reduces the ALE by 80%, meaning the residual ALE is $100,000 per year. The net benefit calculation must account for the time value of money in a real-world cost-benefit analysis, but here a simple three-year horizon is used without discounting, which is common in initial CRISC assessments.
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
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
IT Risk Assessment — study guide chapter
Learn the concepts, then practise the questions
IT Risk Assessment practice questions
Targeted practice on this topic area only
All CRISC questions
500 questions across all exam domains
Certified in Risk and Information Systems Control CRISC study guide
Full concept coverage aligned to exam objectives
CRISC practice test guide
How to use practice tests most effectively before exam day
Related practice questions
Use these pages to review the topic behind this question. This is how one missed question becomes focused revision.
Practise CRISC questions linked to IT Risk Identification.
Practise CRISC questions linked to Risk Response and Mitigation.
Practise CRISC questions linked to Risk and Control Monitoring and Reporting.
Practise CRISC questions linked to IT Risk Assessment.
Practise CRISC questions linked to CRISC fundamentals.
Practise CRISC questions linked to CRISC scenario.
Practise CRISC questions linked to CRISC troubleshooting.
Practice this exam
Short sessions build daily habit. Longer sessions build exam-day stamina. Try a timed session to simulate real conditions.
FAQ
IT Risk Assessment — This question tests IT Risk Assessment — Read the scenario before looking for a memorised answer..
The correct answer is: $850,000 — The correct answer is D because 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.
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.
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 →
Last reviewed: Jun 11, 2026
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.
Question Discussion
Share a tip, memory trick, or ask about the reasoning behind this question. Do not post real exam questions, leaked content, braindumps, or copyrighted exam material. Comments are moderated and may be removed without notice.
Sign in to join the discussion.