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Difficulty: HardRisk Identification, Assessment, and Response Strategies

A cloud-hosted video rendering cluster maintained by a media organization has an estimated Asset Value (AVAV) of $1,500,000\$1,500,000. Operational metrics show that ransomware incidents targeting the rendering nodes have an Annualized Rate of Occurrence (AROARO) of 0.200.20 and an unmitigated Exposure Factor (EFEF) of 0.500.50. The organization deploys an automated immutable backup solution costing $25,000\$25,000 annually. With this safeguard in place, the Exposure Factor (EFEF) for ransomware attacks drops to 0.100.10, while the AROARO remains unchanged at 0.200.20. What is the net annual financial benefit (in USD) realized by implementing this security control?

Answer: 95000 USD

Answer

The net annual financial benefit realized by implementing the safeguard is $95,000.
The baseline Annualized Loss Expectancy (ALE) is calculated as AV×EF×ARO=$1,500,000×0.50×0.20=$150,000AV \times EF \times ARO = \$1,500,000 \times 0.50 \times 0.20 = \$150,000. With the control active, the mitigated ALE becomes $1,500,000×0.10×0.20=$30,000\$1,500,000 \times 0.10 \times 0.20 = \$30,000, resulting in an annual loss reduction of $120,000\$120,000. Subtracting the annual safeguard maintenance cost of $25,000\$25,000 yields a net annual financial benefit of $95,000\$95,000.

Step-by-Step Solution

1
Calculate the initial Single Loss Expectancy (SLE) and Annualized Loss Expectancy (ALE)
Initial SLE = $1,500,000×0.50=$750,000\$1,500,000 \times 0.50 = \$750,000; Initial ALE = $750,000×0.20=$150,000\$750,000 \times 0.20 = \$150,000.
Establishes baseline financial risk exposure prior to implementing security controls.
2
Calculate the post-mitigation Single Loss Expectancy (SLE) and Annualized Loss Expectancy (ALE)
Post-mitigation SLE = $1,500,000×0.10=$150,000\$1,500,000 \times 0.10 = \$150,000; Post-mitigation ALE = $150,000×0.20=$30,000\$150,000 \times 0.20 = \$30,000.
Determines the remaining annualized loss after applying the Exposure Factor reduction.
3
Calculate net annual benefit by subtracting safeguard cost from ALE reduction
ALE Reduction = $150,000−$30,000=$120,000\$150,000 - \$30,000 = \$120,000; Net Benefit = $120,000−$25,000=$95,000\$120,000 - \$25,000 = \$95,000.
Evaluates the overall cost-effectiveness of the control solution.

Key Concept

Quantitative Risk Analysis - Net Annual Safeguard Value
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Topics

Risk Identification, Assessment, and Response Strategies

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