hardMultiple Choice
CRISC Uses a quantitative risk analysis method Practice Question
An organization uses a quantitative risk analysis method. The annualized loss expectancy (ALE) for a specific risk is calculated as $500,000. The cost of implementing a control is $150,000 per year, and it is expected to reduce the ALE by 80%. What is the net benefit of implementing the control?
⚠ Common exam trap
It's easy for candidates to confuse the gross reduction in ALE ($400,000) with the net benefit, forgetting to subtract the annual control cost, leading them to select Option B.
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
✓
$250,000
The current ALE is $500,000. An 80% reduction means the ALE decreases by $400,000, resulting in a new ALE of $100,000. The annual control cost is $150,000. The net benefit is the reduction in ALE ($400,000) minus the control cost ($150,000), which equals $250,000. Option C is correct because it correctly calculates the net benefit as the risk reduction minus the control cost.
Answer analysis
Option-by-option breakdown
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
Net benefit is control cost subtracted from the mitigated loss: $500,000 × 80% = $400,000 saved, minus $150,000 = $250,000. $50,000 results from subtracting the residual ALE ($100,000) from the control cost, an arithmetic slip rather than the correct formula.
- ✗
$400,000
Why it's wrong here
$400,000 is the loss avoided by the control ($500,000 × 80%), not the net benefit; the $150,000 annual control cost must still be deducted, yielding $250,000. Quoting the gross saving omits the cost side of the calculation.
- ✓
$250,000
Why this is correct
The control cuts the $500,000 ALE by 80%, giving a $400,000 reduction in expected annual loss. Subtracting the $150,000 annual control cost yields a net benefit of $250,000, satisfying the stem's quantitative comparison of risk reduction against control cost.
- ✗
$350,000
Why it's wrong here
$350,000 subtracts only the $150,000 control cost from the original $500,000 ALE, ignoring the residual risk that remains after the control reduces losses by 80%. It is tempting because subtracting cost from ALE is the right shape of calculation, but the correct figure requires the $400,000 mitigated loss first.
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Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
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