What is the highest amount a company should spend annually on countermeasures for protecting an asset valued at $1,000,000 from a threat that has an annualized rate of occurrence (ARO) of once every…

Question

Options

• A$300,000
• B$150,000
• C$60,000
• D$1,500

• A
  10% (3)
• B
  3% (1)
• C
  83% (25)
• D
  3% (1)

Explanation

The cost of a countermeasure should not be greater in cost than the risk it mitigates (ALE). For a quantitative risk assessment, the equation is ALE = ARO x SLE where the SLE is calculated as the product of asset value x exposure factor. An event that happen once every five years would have an ARO of .2 (1 divided by 5). SLE = Asset Value (AV) x Exposure Fact (EF) SLE = 1,000,000 x .30 = 300,000 ALE = SLE x Annualized Rate of Occurance (ARO) ALE = 300,000 x .2 = 60,000 Know your acronyms: ALE -- Annual loss expectancy ARO -- Annual rate of occurrence SLE -- Single loss expectancy The following are incorrect answers: $300,000 is incorrect. See the explanation of the correct answer for the correct calculation. $150,000 is incorrect. See the explanation of the correct answer for the correct calculation. $1,500 is incorrect. See the explanation of the correct answer for the correct calculation.

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