easyMultiple Choice
SSCP Practice Question: During a quantitative risk analysis, the asset…
During a quantitative risk analysis, the asset value is $500,000, the exposure factor is 40%, and the annual rate of occurrence is 0.5. What is the annualized loss expectancy (ALE)?
⚠ Common exam trap
ISC2 often tests the distinction between SLE and ALE, trapping candidates who compute the SLE ($200,000) and stop there, forgetting to multiply by the ARO (0.5) to get the annualized value.
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
✓
$100,000
The annualized loss expectancy (ALE) is calculated as single loss expectancy (SLE) multiplied by the annual rate of occurrence (ARO). SLE is asset value ($500,000) times exposure factor (40%) = $200,000. ALE = $200,000 × 0.5 = $100,000. This is the standard quantitative risk analysis formula per NIST SP 800-30.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
$200,000
Why it's wrong here
This is the single loss expectancy (asset value × exposure factor), not the annualised figure. It is tempting because SLE is the intermediate step in the ALE calculation, and it would be the correct answer if the question asked for the loss from one occurrence rather than the annual total.
- ✗
$500,000
Why it's wrong here
This restates the asset value, ignoring both the exposure factor and the annual rate of occurrence. It is tempting because the asset value is the largest number in the stem, but ALE requires the SLE (asset value × exposure factor) multiplied by the ARO, giving $100,000.
- ✓
$100,000
Why this is correct
ALE equals single loss expectancy multiplied by annualised rate of occurrence. SLE is $500,000 × 40% = $200,000; multiplying by 0.5 gives $100,000. This satisfies the stem's quantitative inputs directly, converting asset value, exposure factor and occurrence rate into an expected annual loss figure.
- ✗
$250,000
Why it's wrong here
This equals asset value multiplied by the annual rate of occurrence, omitting the exposure factor entirely. It is tempting because multiplying two of the three given figures produces a plausible-looking loss figure, but ALE requires SLE (asset value × exposure factor) first, then multiplication by ARO.
Go deeper
Related to this question
About these practice questions
One of 971 original SSCP practice questions on Courseiva, each with a full explanation and wrong-answer analysis — not exam dumps or protected exam content. Learn why practice questions differ from exam dumps →
Same concept, more angles
1 more way this is tested on SSCP
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. An organization wants to perform a risk analysis for a new cloud application. Which quantitative metric is most commonly used to calculate risk?
easy- A.Control effectiveness.
- B.Threat likelihood.
- C.Residual risk.
- ✓ D.Annualized Loss Expectancy (ALE).
Why D: Annualized Loss Expectancy (ALE) is the most commonly used quantitative metric for calculating risk because it combines the expected financial loss from a single event (Single Loss Expectancy) with the annual frequency of that event (Annualized Rate of Occurrence). This produces a dollar-value risk figure that organizations can directly compare against security control costs and budget decisions for a cloud application.
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.