- A
$120,000
Why wrong: This does not account for discounting correctly.
- B
$133,180
Correctly calculated NPV.
- C
$200,000
Why wrong: This represents total undiscounted savings.
- D
$160,000
Why wrong: This ignores discounting.
Question 771 of 1,000
SSCP Risk Identification, Monitoring, and Analysis Practice Question
This SSCP practice question tests your understanding of risk identification, monitoring, and analysis. 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's risk register lists a vulnerability with an annualized loss expectancy (ALE) of $50,000. The cost of implementing a mitigation control is $40,000 with an expected lifespan of 5 years. The control is expected to reduce the ALE by 80%. What is the net present value (NPV) of implementing this control over 5 years, assuming a discount rate of 5%? (Ignore residual risk for simplicity.)
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
✓
$133,180
The correct answer is B because the net present value (NPV) is calculated by subtracting the initial control cost from the present value of the annual savings over 5 years. The control reduces the ALE by 80%, saving $40,000 per year ($50,000 × 0.8). Using a 5% discount rate, the present value of these savings is $40,000 × 4.3295 (PV annuity factor for 5 years at 5%) = $173,180. Subtracting the $40,000 implementation cost gives an NPV of $133,180.
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.
- ✗
$120,000
Why it's wrong here
This does not account for discounting correctly.
- ✓
$133,180
Why this is correct
Correctly calculated NPV.
Related concept
Read the scenario before looking for a memorised answer.
- ✗
$200,000
Why it's wrong here
This represents total undiscounted savings.
- ✗
$160,000
Why it's wrong here
This ignores discounting.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates often forget to discount future savings to present value, leading them to pick the undiscounted total savings ($200,000) or a simple subtraction ($160,000), rather than applying the 5% discount rate correctly.
Detailed technical explanation
How to think about this question
The NPV formula used here is NPV = Σ (Annual Savings / (1 + r)^t) - Initial Cost, where r is the discount rate and t is the year. The present value annuity factor for 5 years at 5% is (1 - (1 + 0.05)^-5) / 0.05 = 4.3295, which is standard in financial risk analysis for comparing control costs against future risk reduction. In real-world risk management, ignoring residual risk (the remaining 20% ALE of $10,000 per year) would be a simplification, but it is explicitly allowed here.
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.
TExam Day Tips
- 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 security team runs a vulnerability scan on a web application and discovers an unpatched SQL injection flaw. The team prioritises remediation by CVSS score — critical flaws are patched within 24 hours, high within 7 days. Questions like this test whether you understand vulnerability management processes, scanning tools, and remediation prioritisation.
What to study next
Got this wrong? Here's your next step.
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FAQ
Questions learners often ask
What does this SSCP question test?
Risk Identification, Monitoring, and Analysis — This question tests Risk Identification, Monitoring, and Analysis — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: $133,180 — The correct answer is B because the net present value (NPV) is calculated by subtracting the initial control cost from the present value of the annual savings over 5 years. The control reduces the ALE by 80%, saving $40,000 per year ($50,000 × 0.8). Using a 5% discount rate, the present value of these savings is $40,000 × 4.3295 (PV annuity factor for 5 years at 5%) = $173,180. Subtracting the $40,000 implementation cost gives an NPV of $133,180.
What should I do if I get this SSCP question wrong?
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
What is the key concept behind this question?
Read the scenario before looking for a memorised answer.
About these practice questions
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Last reviewed: Jul 4, 2026
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.
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