The recommended action is to implement controls to reduce the likelihood or impact until the annual loss expectancy (ALE) is below $150,000. This is correct because the ALE is calculated by multiplying the single loss expectancy (SLE) of $500,000 by the annualized rate of occurrence (ARO) of 0.4, yielding $200,000, which exceeds the organization’s risk appetite of $150,000 in annual losses. On the CRISC exam, this scenario tests your ability to perform an annual loss expectancy calculation and risk decision, often appearing in quantitative analysis questions where you must compare the computed ALE against the stated risk appetite to determine if residual risk is acceptable. A common trap is assuming that a low ARO alone makes the risk tolerable, but the key is that any ALE above the appetite threshold demands remediation. Remember the memory tip: “ALE above appetite? Action required.”
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.
During a quantitative risk analysis, the risk practitioner determines that the single loss expectancy (SLE) for a ransomware attack is $500,000 and the annualized rate of occurrence (ARO) is 0.4. The organization has a risk appetite that accepts annual losses up to $150,000. What is the recommended action?
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Implement controls to reduce the likelihood or impact until ALE is below $150,000
The ALE is $500,000 * 0.4 = $200,000, which exceeds the risk appetite of $150,000. Therefore, additional controls are needed to reduce either SLE or ARO. Option A is incorrect because residual risk is not yet acceptable; option B is not justified by cost; option D is only if risk is within appetite.
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.
✗
Purchase insurance to cover the potential loss
Why it's wrong here
Insurance transfers risk but does not reduce ALE; it may be considered but not recommended without evaluating cost.
✗
Accept the risk because it is within the organization's risk appetite
Why it's wrong here
ALE of $200,000 exceeds appetite of $150,000; cannot accept.
✗
Reassess using qualitative analysis because the ARO is not precise
Why it's wrong here
Quantitative analysis is valid; switching methods does not solve the exceedance.
✓
Implement controls to reduce the likelihood or impact until ALE is below $150,000
Why this is correct
Since ALE exceeds appetite, controls are necessary to bring residual risk within tolerance.
Related concept
Read the scenario before looking for a memorised answer.
Common exam traps
Common exam trap: answer the scenario, not the keyword
Many certification questions include familiar terms but test a specific constraint. Read the exact wording before choosing an answer that is generally true but wrong for this case.
Detailed technical explanation
How to think about this question
This question should be treated as a scenario, not a definition check. Identify the problem, the constraint and the best action. Then compare each option against those facts.
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.
Use explanations to understand the rule behind the answer.
TExam Day Tips
→Underline the problem statement mentally.
→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.
Identify which CRISC exam domain this question belongs to, then review the specific concept being tested. Practise related questions in that domain and focus on understanding why each wrong answer is tempting — not just why the correct answer is right.
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: Implement controls to reduce the likelihood or impact until ALE is below $150,000 — The ALE is $500,000 * 0.4 = $200,000, which exceeds the risk appetite of $150,000. Therefore, additional controls are needed to reduce either SLE or ARO. Option A is incorrect because residual risk is not yet acceptable; option B is not justified by cost; option D is only if risk is within appetite.
What should I do if I get this CRISC question wrong?
Identify which CRISC exam domain this question belongs to, then review the specific concept being tested. Practise related questions in that domain and focus on understanding why each wrong answer is tempting — not just why the correct answer is right.
What is the key concept behind this question?
Read the scenario before looking for a memorised answer.
About these practice questions
Courseiva creates original exam-style practice questions with explanations and wrong-answer analysis. It does not publish real exam questions, exam dumps, or protected exam content. Learn why practice questions differ from exam dumps →
These questions test the same concept from different angles. Work through them to make sure you can recognise it however the exam phrases it.
Variation 1. A company calculates the annualized loss expectancy (ALE) for a server outage as $75,000. The cost to implement a high-availability solution is $200,000 with a lifespan of 5 years and annual maintenance of $10,000. What is the residual risk if the solution reduces outage likelihood by 90%?
hard
A.$50,000
✓ B.$7,500
C.$42,500
D.$57,500
Why B: The correct answer is B: $7,500. The annualized loss expectancy (ALE) before mitigation is $75,000. The high-availability solution reduces outage likelihood by 90%, so the residual ALE is 10% of $75,000 = $7,500. The cost of the solution ($200,000 capital with $10,000 annual maintenance over 5 years) is used to calculate the cost-benefit or net present value, but does not directly affect the residual risk figure, which is purely the remaining expected loss after controls are applied.
Last reviewed: Jun 24, 2026
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