CRISC Risk Response and Reporting Practice Question
During a cost-benefit analysis for a proposed control, the annual loss expectancy (ALE) for a risk is currently $500,000. The control will cost $100,000 annually and is expected to reduce the ALE by 80%. What is the net benefit of implementing this control?
⚠ Common exam trap
CRISC often tests the distinction between gross reduction in ALE and net benefit, tricking candidates into forgetting to subtract the annual control cost from the ALE reduction.
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
✓
$300,000
The current annual loss expectancy (ALE) is $500,000. An 80% reduction lowers the ALE by $400,000, resulting in a new ALE of $100,000. The annual control cost is $100,000, so the net benefit is the reduction in ALE ($400,000) minus the control cost ($100,000), which equals $300,000.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
$100,000
Why it's wrong here
A $100,000 figure simply restates the control's annual cost, ignoring the $400,000 loss reduction entirely. It tempts candidates who conflate cost with net benefit, or who subtract the control cost from the original $500,000 ALE without applying the 80% reduction. Net benefit requires subtracting the $100,000 cost from the $400,000 mitigated loss.
- ✓
$300,000
Why this is correct
The control reduces ALE by 80%, giving an annualised loss reduction of $400,000. Subtracting the $100,000 annual control cost yields a net benefit of $300,000, satisfying the cost-benefit constraint in the stem. This figure represents the residual value gained after funding the control.
- ✗
$400,000
Why it's wrong here
A $400,000 figure reflects the 80% ALE reduction ($500,000 × 0.8) alone, ignoring the $100,000 annual control cost, so it overstates the return. It tempts candidates who stop at the mitigation value. Net benefit requires subtracting that cost, giving $300,000.
- ✗
$500,000
Why it's wrong here
The $500,000 figure is the current ALE before mitigation, not the net benefit. Subtracting the $100,000 annual control cost from the $400,000 ALE reduction yields $300,000. Quoting the pre-control ALE would be tempting when reporting total risk exposure to management, but the question asks for the control's net benefit.
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Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
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