CRISC Risk Response and Reporting Practice Question
During a cost-benefit analysis for a new control, the annualized loss expectancy (ALE) without the control is $500,000. The control is expected to reduce risk by 80% and will cost $150,000 annually to operate. What is the net benefit of implementing the control?
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
ALE reduction is 80% of $500,000 = $400,000. Net benefit = ALE reduction - annual control cost = $400,000 - $150,000 = $250,000.
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
$400,000 is the risk reduction alone (80% of $500,000), omitting the $150,000 annual operating cost. It is tempting because it represents the mitigated loss, and would be correct if the question asked for the control's benefit rather than its net benefit.
- ✗
$100,000
Why it's wrong here
$100,000 equals the control's cost minus nothing meaningful; the risk reduction of $400,000 minus $150,000 gives $250,000, not this figure. It is tempting as a rough midpoint between cost and benefit, and would be correct only if the control reduced risk by 50%.
- ✗
$350,000
Why it's wrong here
$350,000 subtracts only $150,000 from the original $500,000 ALE, ignoring that the control reduces risk by 80% rather than eliminating it. It is tempting as a simple cost offset, and would be correct only if the control removed all risk.
- ✓
$250,000
Why this is correct
Risk reduction equals 80% of the $500,000 ALE, or $400,000. Subtracting the $150,000 annual control operating cost gives a net benefit of $250,000, the figure that justifies the control against the cost-benefit constraint in the stem.
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Written by Johnson Ajibi, MSc IT Security
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