CRISC IT Risk Assessment Practice Question
An organization uses the FAIR framework to calculate annualized loss expectancy (ALE) for a specific risk. Given that the single loss expectancy (SLE) is $50,000 and the annualized rate of occurrence (ARO) is 0.2, what is the ALE?
⚠ Common exam trap
Many exam-takers confuse the ALE formula with the SLE formula or misplace the decimal point in ARO (0.2 vs. 2.0), leading to inflated values like $100,000 or $250,000.
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
✓
$10,000
The annualized loss expectancy (ALE) is calculated by multiplying the single loss expectancy (SLE) by the annualized rate of occurrence (ARO). Given SLE = $50,000 and ARO = 0.2, the ALE is $50,000 × 0.2 = $10,000. This aligns with the FAIR framework's quantitative risk analysis formula.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
$250,000
Why it's wrong here
This would be SLE divided by ARO, not multiplied.
- ✗
$100,000
Why it's wrong here
This is incorrect; it's double the correct ALE.
- ✓
$10,000
Why this is correct
Correctly calculated: $50,000 × 0.2 = $10,000.
- ✗
$50,000
Why it's wrong here
This is the SLE, not the ALE.
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JA
Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
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