CRISC IT Risk Assessment Practice Question
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)?
⚠ Common exam trap
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.
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.
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.
- ✗
$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.
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JA
Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
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.