Question 1hardmultiple choice
Full question →- A
$400,000
Why wrong: This would be 2 * SLE.
- B
$100,000
ALE = ARO * SLE.
- C
$100,000
Why wrong: This would be SLE / ARO.
- D
$200,000
Why wrong: This is the SLE.
Question 194 of 500
Quick Answer
The answer is $100,000. This is correct because the annualized loss expectancy (ALE) is derived by multiplying the annualized rate of occurrence (ARO) by the single loss expectancy (SLE), so 0.5 times $200,000 equals $100,000. The ALE calculation from ARO and SLE is a foundational quantitative risk analysis method tested on the CRISC exam, where you must distinguish between these three metrics: ARO measures how often a threat is expected to occur per year, SLE represents the monetary loss from a single event, and ALE gives the expected yearly loss. A common trap is confusing ARO with a percentage—remember that an ARO of 0.5 means one event every two years, not a 50% chance of a single event. For a quick memory tip, think of the formula as “A-Ro-SLE” (ARO × SLE = ALE), and recall that if either factor is zero, the annualized loss is zero.
CRISC IT Risk Assessment Practice Question
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.
An organization uses a quantitative risk analysis method. The annualized rate of occurrence (ARO) for a specific threat is 0.5, and the single loss expectancy (SLE) is $200,000. What is the annualized loss expectancy (ALE)?
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
✓
$100,000
The annualized loss expectancy (ALE) is calculated as ARO × SLE = 0.5 × $200,000 = $100,000. This represents the expected annual financial loss from the threat, factoring in both the frequency of occurrence and the impact per incident.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
$400,000
Why it's wrong here
This would be 2 * SLE.
- ✓
$100,000
Why this is correct
ALE = ARO * SLE.
Related concept
Read the scenario before looking for a memorised answer.
- ✗
$100,000
Why it's wrong here
This would be SLE / ARO.
- ✗
$200,000
Why it's wrong here
This is the SLE.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates may confuse ARO with a probability (0.5) and mistakenly multiply by 2 instead of 0.5, or they may ignore the ARO entirely and select the SLE as the ALE, failing to annualize the loss correctly.
Detailed technical explanation
How to think about this question
Quantitative risk analysis relies on the formula ALE = SLE × ARO, where SLE is derived from asset value (AV) and exposure factor (EF). In this case, an ARO of 0.5 means the threat is expected to occur once every two years, so the annualized loss is half the single loss. Real-world scenarios often involve threats with fractional AROs, such as a major data breach occurring every 2–3 years, making this calculation critical for budgeting insurance premiums or security controls.
KKey Concepts to Remember
- Read the scenario before looking for a memorised answer.
- Find the constraint that changes the correct option.
- Eliminate answers that are true in general but not in this case.
TExam Day Tips
- Watch for words such as best, first, most likely and least administrative effort.
- Review why wrong options are wrong, not only why the correct option is correct.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
How this comes up in practice
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
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FAQ
Questions learners often ask
What does this CRISC question test?
IT Risk Assessment — This question tests IT Risk Assessment — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: $100,000 — The annualized loss expectancy (ALE) is calculated as ARO × SLE = 0.5 × $200,000 = $100,000. This represents the expected annual financial loss from the threat, factoring in both the frequency of occurrence and the impact per incident.
What should I do if I get this CRISC question wrong?
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
What is the key concept behind this question?
Read the scenario before looking for a memorised answer.
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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.
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