CRISC Certified in Risk and Information Systems ControlInformation Technology and SecurityHard
A company is considering whether to invest in a new security solution that costs $50,000 annually. The solution is expected to reduce the Annual Loss Expectancy (ALE) from $150,000 to $70,000. What is the return on investment (ROI) for this security solution in the first year?
- A160%
- B80%
- C60%
- D100%
Show answer & explanationAnswer & explanation
Correct answer: C. 60%
First, calculate the annual savings: Original ALE ($150,000) - New ALE ($70,000) = $80,000. Then, calculate the ROI: (Annual Savings - Cost) / Cost = ($80,000 - $50,000) / $50,000 = $30,000 / $50,000 = 0.60 or 60%.
Why the other options are wrong
- A. Incorrect. This calculation is likely based on an error in subtracting or dividing.
- B. Incorrect. This would be the savings as a percentage of the original ALE, not ROI.
- D. Incorrect. This would imply savings exactly equal to the cost.
Return on Investment (ROI) for Security
A financial metric used to evaluate the efficiency of a security investment by comparing the monetary benefit (reduced losses) to the cost of the investment.
- Calculated as (Savings - Cost) / Cost.
- Savings typically derived from reduced Annual Loss Expectancy (ALE).
- Helps justify security expenditures to management.
Memory trick: Savings minus Cost, then divide by Cost.