Certified in Risk and Information Systems Control (CRISC) — Question 3

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?

Answer options

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

Correct answer: C

Explanation

The Annual Loss Expectancy (ALE) is calculated by multiplying the asset value by the exposure factor and the annual rate of occurrence. In this case, ALE = $200,000 * 0.45 * 12 = $1,080,000. However, since the question states the losses occur once a month, the correct calculation leads to $108,000 for the ALE, making option C the correct answer. The other options are incorrect as they do not reflect the correct computation based on the provided values.