CRISC IT Risk Assessment Practice Question
A quantitative risk analysis for a data breach yields an Annualized Loss Expectancy (ALE) of $500,000. The Single Loss Expectancy (SLE) is $100,000. What is the Annualized Rate of Occurrence (ARO)?
⚠ Common exam trap
Many candidates confuse the formula and incorrectly divide SLE by ALE (yielding 0.2) instead of dividing ALE by SLE, or they misplace decimal points when calculating the rate.
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
✓
5
The Annualized Loss Expectancy (ALE) is calculated as Single Loss Expectancy (SLE) multiplied by the Annualized Rate of Occurrence (ARO). Given ALE = $500,000 and SLE = $100,000, the ARO is $500,000 / $100,000 = 5. This means the data breach is expected to occur 5 times per year.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
5
Why this is correct
ARO is derived by dividing ALE by SLE: $500,000 ÷ $100,000 = 5, meaning the loss event is expected five times annually. This satisfies the quantitative relationship ALE = SLE × ARO, so an ARO of 5 reconciles the given figures.
- ✗
50
Why it's wrong here
Fifty is the SLE divided by the ALE, inverting the formula; ARO equals ALE divided by SLE, giving five. It is tempting because 500,000 ÷ 100,000 = 5 invites a careless transposition, and 50 resembles a plausible annual frequency for a frequent low-impact event.
- ✗
0.2
Why it's wrong here
0.2 is the SLE divided by the ALE (100,000 ÷ 500,000), which inverts the relationship; ARO is ALE ÷ SLE, yielding 5. It is tempting because the arithmetic is clean and the small decimal looks like a realistic annualised probability for a rare breach event.
- ✗
500,000
Why it's wrong here
500,000 merely restates the given ALE rather than deriving ARO; dividing ALE by SLE (500,000 ÷ 100,000) gives 5 occurrences per year. It is tempting because the figure is already prominent in the stem, and ARO is sometimes confused with the monetary loss value itself.
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Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
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