CRISC Risk Response and Reporting Practice Question
A risk practitioner has completed a quantitative risk analysis for a customer-facing payment platform. The analysis shows an inherent annualized loss expectancy (ALE) of $2.4 million. Management wants to fund a tokenization control that reduces the ALE to $600,000, but the control costs $1.9 million per year to operate. Which action should the risk practitioner recommend?
⚠ Common exam trap
The trap here is treating the gross reduction in ALE as the benefit and never subtracting the control's ongoing cost.
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
✓
Reject the tokenization control because its annual cost exceeds the reduction in ALE, and document the accepted residual risk.
Cost-benefit analysis compares the control's annual cost against the reduction in expected loss it produces. Here the $1.9 million cost exceeds the $1.8 million ALE reduction, so the control is not economically justified. The correct response is to advise against funding it while ensuring the remaining $600,000 residual risk is explicitly accepted and documented by the accountable risk owner.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
Reject the tokenization control because its annual cost exceeds the reduction in ALE, and document the accepted residual risk.
Why this is correct
The control costs $1.9 million but only reduces expected loss by $1.8 million, producing a negative net benefit of $100,000 per year. Spending more than the expected loss avoided is not cost-justified, so the practitioner should advise against funding it and ensure the $600,000 residual ALE is formally accepted by the appropriate risk owner with documented rationale.
- ✗
Defer the decision indefinitely until the inherent ALE increases enough to justify the control cost.
Why it's wrong here
Indefinite deferral is not a risk response; it leaves the organization carrying $2.4 million of inherent exposure with no documented acceptance or treatment decision. Waiting for losses to rise before acting ignores the requirement to make and record a deliberate response. If the control is not funded, the residual risk must still be formally accepted now, not left in limbo.
- ✗
Implement the tokenization control because it reduces the ALE by $1.8 million.
Why it's wrong here
The $1.8 million reduction is the control's risk reduction value, not its net benefit. Comparing that figure alone ignores the $1.9 million annual operating cost, which exceeds the reduction. A control that costs more than the loss it prevents does not improve the risk-adjusted position, so recommending implementation on the strength of the gross reduction alone misstates the economics of this scenario.
- ✗
Implement the tokenization control and offset the shortfall by reducing the scope of the annual penetration test.
Why it's wrong here
Funding an uneconomic control by weakening an unrelated assurance activity does not make the control cost-justified; it simply transfers budget and increases exposure elsewhere. The core economics remain negative in this scenario, and cannibalizing penetration testing reduces the organization's ability to validate that other controls still operate effectively, compounding rather than resolving the problem.
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JA
Written and reviewed by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
Last reviewed September 2026 · checked against the official ISACA exam blueprint
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.