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Difficulty: MediumRisk Identification, Assessment, and Response Strategies

An e-commerce retailer is conducting a quantitative risk assessment for its primary inventory management database, which has an Asset Value (AVAV) of $250,000\$250,000. Security analysts estimate that a ransomware outbreak would impact 40%40\% of the system (EF=0.40EF = 0.40). Based on threat intelligence, such an attack is expected to occur once every 55 years (ARO=0.20ARO = 0.20). What is the Annual Loss Expectancy (ALEALE) associated with this risk?

  1. $20,000\$20,000Answer
  2. B
    $100,000\$100,000
  3. C
    $50,000\$50,000
  4. D
    $500,000\$500,000

Answer

The Annual Loss Expectancy (ALEALE) is $20,000\$20,000.
The correct answer of $20,000\$20,000 is determined using the quantitative risk formula ALE=SLE×ARO=(AV×EF)×AROALE = SLE \times ARO = (AV \times EF) \times ARO. Multiplying an Asset Value of $250,000\$250,000 by an Exposure Factor of 0.400.40 gives an SLESLE of $100,000\$100,000. Multiplying $100,000\$100,000 by an AROARO of 0.200.20 results in an ALEALE of $20,000\$20,000.

Step-by-Step Solution

1
Calculate the Single Loss Expectancy (SLE)
SLE=AV×EF=$250,000×0.40=$100,000SLE = AV \times EF = \$250,000 \times 0.40 = \$100,000
SLE determines the estimated monetary impact each time the risk event occurs.
2
Calculate the Annual Loss Expectancy (ALE)
ALE=SLE×ARO=$100,000×0.20=$20,000ALE = SLE \times ARO = \$100,000 \times 0.20 = \$20,000
ALE converts the single incident loss expectancy into an annualized metric using the occurrence frequency.

Key Concept

Quantitative Risk Analysis (ALE Calculation)
Estimated Time:1m 30s
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Topics

Risk Identification, Assessment, and Response Strategies

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