Tag: Question 385

CRISC Certified in Risk and Information Systems Control – Question385

You are the project manager of the NHQ project in Bluewell Inc. The project has an asset valued at $200,000 and is subjected to an exposure factor of 45 percent. If the annual rate of occurrence of loss in this project is once a month, then what will be the Annual Loss Expectancy (ALE) of the project?

A. $ 2,160,000
B. $ 95,000
C. $ 108,000
D. $ 90,000

Correct Answer: C

Explanation:

Explanation:
The ALE of this project will be $ 108,000. Single Loss Expectancy is a term related to Quantitative Risk Assessment. It can be defined as the monetary value expected from the occurrence of a risk on an asset. It is mathematically expressed as follows: SLE = Asset value * Exposure factor
Therefore,
SLE = 200,000 * 0.45 = $ 90,000
As the loss is occurring once every month, therefore ARO is 12. Now ALE can be calculated as follows:
ALE = SLE * ARO = 90,000 * 12 = $ 108,000