26.
Which one of the following BIA terms identifies the amount of money a business expects to
lose to a given risk each year?
- A.ARO
- B.SLE
- C.ALE
- D.EF
- Answer & Explanation
- Report
Answer : [C]
Explanation :
Explanation :
| The annualized loss expectancy (ALE) represents the amount of money a business expects to lose to a given risk each year. This figure is quite useful when performing a quantitative prioritization of business continuity resource allocation. |
27.
What BIA metric can be used to express the longest time a business function can be
unavailable without causing irreparable harm to the organization?
- A.SLE
- B.EF
- C.MTD
- D.ARO
- Answer & Explanation
- Report
Answer : [C]
Explanation :
Explanation :
| The maximum tolerable downtime (MTD) represents the longest period a business function can be unavailable before causing irreparable harm to the business. This figure is useful when determining the level of business continuity resources to assign to a particular function. |
28.
You are concerned about the risk that an avalanche poses to your $3 million shipping
facility. Based on expert opinion, you determine that there is a 5 percent chance that an
avalanche will occur each year. Experts advise you that an avalanche would completely
destroy your building and require you to rebuild on the same land. Ninety percent of the $3
million value of the facility is attributed to the building and 10 percent is attributed to the
land itself. What is the single loss expectancy of your shipping facility to avalanches?
- A.$3,000,000
- B.$2,700,000
- C.$270,000
- D.$135,000
- Answer & Explanation
- Report
Answer : [B]
Explanation :
Explanation :
| The SLE is the product of the AV and the EF. From the scenario, you know that the AV is $3,000,000 and the EF is 90 percent, based on that the same land can be used to rebuild the facility. This yields an SLE of $2,700,000. |
29.
Referring to the scenario in question 8, what is the annualized loss expectancy?
- A.$3,000,000
- B.$2,700,000
- C.$270,000
- D.$135,000
- Answer & Explanation
- Report
Answer : [D]
Explanation :
Explanation :
| This problem requires you to compute the ALE, which is the product of the SLE and the ARO. From the scenario, you know that the ARO is 0.05 (or 5 percent). From question 8, you know that the SLE is $2,700,000. This yields an SLE of $135,000. |
30.
You are concerned about the risk that a hurricane poses to your corporate headquarters
in South Florida. The building itself is valued at $15 million. After consulting with the
National Weather Service, you determine that there is a 10 percent likelihood that a hurricane
will strike over the course of a year. You hired a team of architects and engineers
who determined that the average hurricane would destroy approximately 50 percent of the
building. What is the annualized loss expectancy (ALE)?
- A.$750,000
- B.$1.5 million
- C.$1.5 million
- D.$15 million
- Answer & Explanation
- Report
Answer : [A]
Explanation :
Explanation :
| This problem requires you to compute the ALE, which is the product of the SLE and ARO. From the scenario, you know that the ARO is 0.10 (or 10 percent). From the scenario presented, you know that the SLE is $7.5 million. This yields an SLE of $750,000. |
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