Examkin

Question

Difficulty: MediumRisk Identification, Assessment, and Response Strategies

A fintech company operates a cloud-based API gateway handling micro-transactions, with an estimated Asset Value (AVAV) of $600,000\$600,000. A risk assessment identifies that unmitigated Distributed Denial of Service (DDoS) attacks have an Exposure Factor (EFEF) of 35%35\% and an Annualized Rate of Occurrence (AROARO) of 0.500.50. The organization deploys an automated Web Application Firewall (WAF) that reduces the Exposure Factor to 10%10\%. The total annual operational cost of maintaining the WAF is $40,000\$40,000. What is the net annual financial benefit (in dollars) realized by implementing this security control?

Answer: 35000 USD

Answer

The net annual financial benefit realized by implementing the Web Application Firewall is $35,000.
The net financial benefit of implementing a risk response control is calculated by taking the difference between the pre-mitigation Annualized Loss Expectancy (ALEinitialALE_{initial}) and post-mitigation Annualized Loss Expectancy (ALEmitigatedALE_{mitigated}), and then subtracting the annual cost of the safeguard. Here, ALEinitial=$600,000×0.35×0.50=$105,000ALE_{initial} = \$600,000 \times 0.35 \times 0.50 = \$105,000, and ALEmitigated=$600,000×0.10×0.50=$30,000ALE_{mitigated} = \$600,000 \times 0.10 \times 0.50 = \$30,000. The gross ALE reduction is $\$ 75,000 .Subtractingtheannualmaintenancecostof. Subtracting the annual maintenance cost of \40,000$ yields a net annual financial benefit of $\35,000$.

Step-by-Step Solution

1
Calculate the initial Annualized Loss Expectancy (ALEinitialALE_{initial})
ALEinitial=$600,000×0.35×0.50=$105,000ALE_{initial} = \$600,000 \times 0.35 \times 0.50 = \$105,000
Determine the total expected monetary loss per year before applying the security safeguard.
2
Calculate the mitigated Annualized Loss Expectancy (ALEmitigatedALE_{mitigated})
ALEmitigated=$600,000×0.10×0.50=$30,000ALE_{mitigated} = \$600,000 \times 0.10 \times 0.50 = \$30,000
Determine the residual expected monetary loss per year after reducing the Exposure Factor to 10%.
3
Calculate the annual loss reduction (ALE savings)
ALEsavings=$105,000−$30,000=$75,000ALE_{savings} = \$105,000 - \$30,000 = \$75,000
Quantify the gross risk reduction benefit provided by the Web Application Firewall.
4
Subtract the annual operational cost of the safeguard
Net Benefit=$75,000−$40,000=$35,000Net\ Benefit = \$75,000 - \$40,000 = \$35,000
Evaluate the true net financial benefit gained by spending money on the control.

Key Concept

Quantitative Risk Assessment and Safeguard Cost-Benefit Analysis
Estimated Time:1m 30s
Rate this question

Topics

Risk Identification, Assessment, and Response Strategies

More questions from this topic