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Exam CISSP Topic 3 Question 1409 Discussion
Actual exam question for ISC's CISSP exam
Question #: 1409
Topic #: 3
Question #: 1409
Topic #: 3
Which of the following would present the higher annualized loss expectancy (ALE)?
Suggested Answer: B Vote an answer
Earthquake would present the higher annualized loss expectancy (ALE) according to the table in the image.
ALE is a metric that measures the expected loss per year due to a specific risk or threat. ALE is calculated by multiplying the single loss expectancy (SLE), which is the estimated cost of a single occurrence of the risk or threat, by the annualized rate of occurrence (ARO), which is the estimated frequency of the risk or threat occurring in a year. According to the table, the ALE for each event is as follows:
* Fire: $1,000,000 x 0.1 = $100,000
* Flood: $250,000 x 0.2 = $50,000
* Windstorm: $50,000 x 0.5 = $25,000
* Earthquake: $800,000 x 0.02 = $16,000
Therefore, earthquake has the highest ALE of $16,000, followed by fire, flood, and windstorm. Note that the insurance coverage does not affect the ALE calculation, as it only reduces the actual loss, not the expected loss. However, insurance coverage can be used to reduce the total cost of risk (TCOR), which is the sum of ALE and the cost of risk mitigation, such as insurance premiums, deductibles, and administrative costs.
References:
* ALE
* Risk Analysis
* Total Cost of Risk (TCOR)
ALE is a metric that measures the expected loss per year due to a specific risk or threat. ALE is calculated by multiplying the single loss expectancy (SLE), which is the estimated cost of a single occurrence of the risk or threat, by the annualized rate of occurrence (ARO), which is the estimated frequency of the risk or threat occurring in a year. According to the table, the ALE for each event is as follows:
* Fire: $1,000,000 x 0.1 = $100,000
* Flood: $250,000 x 0.2 = $50,000
* Windstorm: $50,000 x 0.5 = $25,000
* Earthquake: $800,000 x 0.02 = $16,000
Therefore, earthquake has the highest ALE of $16,000, followed by fire, flood, and windstorm. Note that the insurance coverage does not affect the ALE calculation, as it only reduces the actual loss, not the expected loss. However, insurance coverage can be used to reduce the total cost of risk (TCOR), which is the sum of ALE and the cost of risk mitigation, such as insurance premiums, deductibles, and administrative costs.
References:
* ALE
* Risk Analysis
* Total Cost of Risk (TCOR)
by whitebeard pirate at May 26, 2024, 01:58 AM
Here are all the actual test exam dumps for IT exams. Most people prepare for the actual exams with our test dumps to pass their exams. So it's critical to choose and actual test pdf to succeed.
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whitebeard pirate
2024-05-26 01:58:29Upvoting a comment with a selected answer will also increase the vote count towards that answer by one. So if you see a comment that you already agree with, you can upvote it instead of posting a new comment.
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