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Difficulty: MediumRisk Identification, Assessment, and Response Strategies

A university research facility hosts a specialized data repository with an estimated Asset Value (AVAV) of $600,000\$600,000. Threat analysis indicates an Exposure Factor (EFEF) of 25%25\% from potential unauthorized network intrusions, with an Annual Rate of Occurrence (AROARO) of 0.400.40. The security team proposes implementing an intrusion prevention system (IPS) that would reduce the EFEF to 5%5\% and the AROARO to 0.100.10. What is the expected annual financial loss reduction achieved by deploying the IPS control?

  1. $57,000\$57,000Answer
  2. B
    $60,000\$60,000
  3. C
    $3,000\$3,000
  4. D
    $147,000\$147,000

Answer

The expected annual financial loss reduction achieved by deploying the IPS control is $57,000\$57,000.
The initial Annual Loss Expectancy (ALEALE) is calculated as AV×EF×ARO=$600,000×0.25×0.40=$60,000AV \times EF \times ARO = \$600,000 \times 0.25 \times 0.40 = \$60,000. The modified ALEALE after control deployment is $600,000×0.05×0.10=$3,000\$600,000 \times 0.05 \times 0.10 = \$3,000. The annual financial loss reduction achieved by the control is the difference between the initial ALEALE and modified ALEALE, which equals $60,000−$3,000=$57,000\$60,000 - \$3,000 = \$57,000.

Step-by-Step Solution

1
Calculate the initial Single Loss Expectancy (SLEinitialSLE_{initial}) and initial Annual Loss Expectancy (ALEinitialALE_{initial}).
SLEinitial=AV×EFinitial=$600,000×0.25=$150,000SLE_{initial} = AV \times EF_{initial} = \$600,000 \times 0.25 = \$150,000. Thus, ALEinitial=SLEinitial×AROinitial=$150,000×0.40=$60,000ALE_{initial} = SLE_{initial} \times ARO_{initial} = \$150,000 \times 0.40 = \$60,000.
Determines the baseline expected annual risk impact before adding controls.
2
Calculate the post-control Single Loss Expectancy (SLEmodifiedSLE_{modified}) and post-control Annual Loss Expectancy (ALEmodifiedALE_{modified}).
SLEmodified=AV×EFmodified=$600,000×0.05=$30,000SLE_{modified} = AV \times EF_{modified} = \$600,000 \times 0.05 = \$30,000. Thus, ALEmodified=SLEmodified×AROmodified=$30,000×0.10=$3,000ALE_{modified} = SLE_{modified} \times ARO_{modified} = \$30,000 \times 0.10 = \$3,000.
Determines the expected residual annual risk impact after adding the IPS.
3
Compute the total annual financial loss reduction.
Loss Reduction =ALEinitial−ALEmodified=$60,000−$3,000=$57,000= ALE_{initial} - ALE_{modified} = \$60,000 - \$3,000 = \$57,000.
Measures the net risk mitigation value delivered by the security control.

Key Concept

Quantitative Risk Assessment (ALE Calculation & Mitigation Value)
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Topics

Risk Identification, Assessment, and Response Strategies

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