A security analyst has determined that a security breach would have a financial impact of $15,000 and is expected to occur twice within a three-year period. Which of the following is the ALE for this risk?

Rationale

The ALE for this risk is $10,000.

The Annualized Loss Expectancy (ALE) is calculated by multiplying the potential loss from a risk by the frequency of the risk occurrence over a year. In this scenario, with a financial impact of $15,000 expected to occur twice within three years, the ALE is determined to be $10,000.

A ($7,500) YOUR ANSWER

This option suggests a lower ALE than calculated. The $7,500 figure would imply either a lower frequency of occurrence or a lower financial impact per occurrence. However, given the risk parameters of two occurrences in three years, this does not accurately reflect the financial risk involved.

B ($10,000) CORRECT

This is the correct calculation. The ALE is calculated as follows: $15,000 (financial impact) multiplied by 2 (occurrences) divided by 3 (years) results in $10,000 per year. This reflects the average expected financial loss over the course of a year for this risk.

C ($15,000) YOUR ANSWER

Choosing $15,000 would imply a misunderstanding of the frequency of the risk. This figure represents the total financial impact of one occurrence rather than accounting for the frequency over multiple years. The ALE must consider how often the risk is expected to occur within a year.

D ($30,000) YOUR ANSWER

This choice incorrectly doubles the financial impact for each occurrence without considering the three-year timeframe. A $30,000 ALE would suggest that the risk occurs more frequently or incurs higher losses per year than the actual calculation indicates.

Conclusion

Understanding the calculation of ALE is crucial for risk management in security analysis. With an expected financial impact of $15,000 occurring twice in three years, the correct ALE of $10,000 reflects the average annual loss. This calculation helps organizations prioritize and allocate resources effectively to mitigate potential risks.

A security analyst has determined that a security breach would have a financial impact of $15,000 and is expected to occur twice within a three-year period. Which of the following is the ALE for this risk?

The ALE for this risk is $10,000.

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