Quick Answer
The answer is $250,000. This is correct because the net benefit of a control in quantitative risk analysis is calculated by subtracting the annual control cost from the reduction in the annualized loss expectancy (ALE). Here, the current ALE is $500,000, and an 80% reduction lowers it by $400,000, yielding a new ALE of $100,000; subtracting the $150,000 annual control cost from the $400,000 reduction gives a net benefit of $250,000. On the CRISC exam, this question tests your ability to perform a net benefit calculation within a quantitative risk analysis framework, a common scenario where you must distinguish between residual risk, control cost, and net benefit. A frequent trap is confusing the new ALE ($100,000) with the net benefit, or forgetting to subtract the control cost from the risk reduction. Remember the mnemonic: “Reduction minus Cost equals Net Benefit” — always compare the gain from reduced loss against the price of the control.
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 uses a quantitative risk analysis method. The annualized loss expectancy (ALE) for a specific risk is calculated as $500,000. The cost of implementing a control is $150,000 per year, and it is expected to reduce the ALE by 80%. What is the net benefit of implementing the control?
$50,000
Why wrong: Incorrectly subtracts reduction from control cost.
$400,000
Why wrong: This is the reduction in ALE, not net benefit.
$250,000
Correct calculation of net benefit.
$350,000
Why wrong: Incorrectly calculates reduction as $500,000 - $150,000.
Answer choices
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
$250,000
The current ALE is $500,000. An 80% reduction means the ALE decreases by $400,000, resulting in a new ALE of $100,000. The annual control cost is $150,000. The net benefit is the reduction in ALE ($400,000) minus the control cost ($150,000), which equals $250,000. Option C is correct because it correctly calculates the net benefit as the risk reduction minus the control cost.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
For each option: why learners choose it and why it is or isn't the right answer here.
$50,000
Why it's wrong here
Incorrectly subtracts reduction from control cost.
$400,000
Why it's wrong here
This is the reduction in ALE, not net benefit.
$250,000
Why this is correct
Correct calculation of net benefit.
Related concept
Read the scenario before looking for a memorised answer.
$350,000
Why it's wrong here
Incorrectly calculates reduction as $500,000 - $150,000.
Common exam traps
The trap here is that candidates often confuse the gross reduction in ALE ($400,000) with the net benefit, forgetting to subtract the annual control cost, leading them to select Option B.
Detailed technical explanation
Quantitative risk analysis computes ALE as single loss expectancy (SLE) multiplied by annualized rate of occurrence (ARO). The net benefit of a control is the reduction in ALE minus the annual cost of the control. In this scenario, the control reduces the ALE by $400,000 (80% of $500,000), and the annual cost is $150,000, yielding a net benefit of $250,000. This calculation is fundamental to cost-benefit analysis in risk management, ensuring that control investments are justified by the risk reduction they provide.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
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
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FAQ
IT Risk Assessment — This question tests IT Risk Assessment — Read the scenario before looking for a memorised answer..
The correct answer is: $250,000 — The current ALE is $500,000. An 80% reduction means the ALE decreases by $400,000, resulting in a new ALE of $100,000. The annual control cost is $150,000. The net benefit is the reduction in ALE ($400,000) minus the control cost ($150,000), which equals $250,000. Option C is correct because it correctly calculates the net benefit as the risk reduction minus the control cost.
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
Read the scenario before looking for a memorised answer.
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Last reviewed: Jun 25, 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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