KSA Risk Management & Assessment 4

Question 1

If an asset is worth $200,000 and an incident would destroy 25% of its value, what is the single loss expectancy (SLE)?

Accepted Answer

$50,000

Answer

SLE = asset value × exposure factor = $200,000 × 0.25 = $50,000.

Question 2

If the SLE is $50,000 and the event is expected twice per year, what is the annualized loss expectancy (ALE)?

Accepted Answer

$100,000

Answer

ALE = SLE × annualized rate of occurrence = $50,000 × 2 = $100,000.

Question 3

A control costs $30,000 per year and reduces ALE from $100,000 to $60,000. Is it cost-effective?

Accepted Answer

Yes, because it saves $40,000 annually at a $30,000 cost

Answer

The control's benefit ($40,000 reduction) exceeds its annual cost ($30,000), yielding a net gain of $10,000.

Question 4

Monte Carlo simulation is used in quantitative risk analysis to:

Accepted Answer

Model a range of possible outcomes by running many random iterations

Answer

Monte Carlo simulation runs thousands of iterations with random inputs to produce a probability distribution of outcomes.

Question 5

Expected monetary value (EMV) of a risk is calculated as:

Accepted Answer

Probability × impact

Answer

EMV multiplies the probability of an event by its monetary impact to weigh risks.

KSA - Knowledge, Skills, and Abilities Practice Test