- A
$500,000
Why wrong: Incorrect calculation, e.g., 10*50000.
- B
$1,000,000
ALE = TEF × Vulnerability × Loss Magnitude = 10 × 0.2 × $500,000 = $1,000,000.
- C
$100,000
Why wrong: Incorrect calculation, e.g., 10*0.2*50000.
- D
$2,500,000
Why wrong: Incorrect calculation, e.g., 10*0.5*500000.
Question 856 of 1,000
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 using the FAIR framework estimates that a threat event frequency (TEF) is 10 per year, vulnerability is 0.2, and loss magnitude per event is $500,000. 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
✓
$1,000,000
The FAIR framework calculates ALE as TEF × Vulnerability × Loss Magnitude. Here, 10 × 0.2 × $500,000 = $1,000,000. This correctly incorporates the vulnerability factor (0.2) as a probability of threat success, yielding the expected annual loss.
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.
- ✗
$500,000
Why it's wrong here
Incorrect calculation, e.g., 10*50000.
- ✓
$1,000,000
Why this is correct
ALE = TEF × Vulnerability × Loss Magnitude = 10 × 0.2 × $500,000 = $1,000,000.
Related concept
Read the scenario before looking for a memorised answer.
- ✗
$100,000
Why it's wrong here
Incorrect calculation, e.g., 10*0.2*50000.
- ✗
$2,500,000
Why it's wrong here
Incorrect calculation, e.g., 10*0.5*500000.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates often forget to multiply by the vulnerability factor, assuming TEF already accounts for success, and thus incorrectly select $500,000 (option A) or $5,000,000 (not listed), rather than applying the full FAIR formula.
Detailed technical explanation
How to think about this question
In FAIR, ALE = TEF × Vulnerability × Loss Magnitude, where Vulnerability is the probability that a threat event will result in a loss (0.0 to 1.0). This differs from traditional ALE (ARO × SLE) by explicitly separating threat frequency from susceptibility. In practice, a vulnerability of 0.2 might reflect a 20% chance that a firewall rule failure leads to data exfiltration, making the annualized loss $1M rather than $5M.
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
Got this wrong? Here's your next step.
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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: $1,000,000 — The FAIR framework calculates ALE as TEF × Vulnerability × Loss Magnitude. Here, 10 × 0.2 × $500,000 = $1,000,000. This correctly incorporates the vulnerability factor (0.2) as a probability of threat success, yielding the expected annual loss.
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: Jul 4, 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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