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SSCP Practice Question: A risk manager is calculating the annualized loss…

A risk manager is calculating the annualized loss expectancy (ALE) for a server. The single loss expectancy (SLE) is $5,000 and the annualized rate of occurrence (ARO) is 0.2. What is the ALE?

⚠ Common exam trap

A common mix-up: candidates confuse the ALE formula by dividing SLE by ARO instead of multiplying, leading to the inflated $25,000 figure in option A.

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

The annualized loss expectancy (ALE) is calculated by multiplying the single loss expectancy (SLE) by the annualized rate of occurrence (ARO). Here, SLE = $5,000 and ARO = 0.2, so ALE = $5,000 × 0.2 = $1,000. This represents the expected annual financial loss from the server risk.

Answer analysis

Option-by-option breakdown

For each option: why learners choose it and why it is or isn't the right answer here.

  • ✗

    $25,000

    Why it's wrong here

    ALE is SLE multiplied by ARO, giving $5,000 × 0.2 = $1,000, not $25,000. It is tempting because dividing SLE by ARO produces $25,000, and that division would be the correct operation when deriving SLE from a known ALE and ARO.

  • ✓

    $1,000

    Why this is correct

    ALE is calculated by multiplying single loss expectancy by annualised rate of occurrence: $5,000 × 0.2 = $1,000. This expresses the expected yearly loss from the risk, letting the risk manager compare it against the cost of controls.

  • ✗

    $5,000

    Why it's wrong here

    $5,000 is the SLE, not the ALE; ALE requires multiplying SLE by the ARO of 0.2, yielding $1,000. It is tempting because SLE is the per-incident loss figure, and quoting SLE would be the correct choice when the question asks for the loss from a single occurrence.

  • ✗

    $100

    Why it's wrong here

    $100 results from multiplying $5,000 by 0.02, misplacing the decimal in the ARO of 0.2; the correct product is $1,000. It is tempting because it looks like a plausible annualised figure, and $100 would be correct if the ARO were 0.02.

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JA

Written by Johnson Ajibi, MSc IT Security

Senior Network & Security Engineer · founder of Courseiva

This SSCP practice question is part of Courseiva's free ISC2 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 SSCP exam.