Examkin

Question

Difficulty: EasyRisk Identification, Assessment, and Response Strategies

An organization is conducting a quantitative risk assessment on an internal document storage server. Security analysts determine that a severe malware infection on the server results in a Single Loss Expectancy (SLE) of $10,000. Historical threat metrics indicate an Annual Rate of Occurrence (ARO) of 0.5 (occurring approximately once every two years). What is the Annual Loss Expectancy (ALE) for this risk?

  1. $5,000Answer
  2. B
    $10,000
  3. C
    $20,000
  4. D
    $50,000

Answer

The Annual Loss Expectancy (ALE) for the document storage server is $5,000.
The correct calculation for Annual Loss Expectancy (ALE) uses the standard formula ALE=SLE×AROALE = SLE \times ARO. Multiplying the Single Loss Expectancy of 10,000byanAnnualRateofOccurrenceof0.5resultsinanexpectedannuallossof10,000 by an Annual Rate of Occurrence of 0.5 results in an expected annual loss of 5,000.

Step-by-Step Solution

1
Identify the given quantitative variables from the scenario.
Single Loss Expectancy (SLE) = $10,000; Annual Rate of Occurrence (ARO) = 0.5.
These standard metrics are required to calculate expected annual financial impact.
2
Apply the standard quantitative risk formula for Annual Loss Expectancy.
ALE=SLE×AROALE = SLE \times ARO
ALE represents the annualized financial loss expected from a specific risk.
3
Multiply the SLE by the ARO.
ALE=$10,000×0.5=$5,000ALE = \$10,000 \times 0.5 = \$5,000
Performing the arithmetic yields the final expected annual monetary loss.

Key Concept

Quantitative Risk Calculation (Annual Loss Expectancy)
Estimated Time:45s
Rate this question

Topics

Risk Identification, Assessment, and Response Strategies

More questions from this topic