Appendix A

Answers to Review Questions

images Chapter 1: Measuring and Weighing Risk

  1. C. Guidelines help clarify processes to maintain standards. Guidelines tend to be less formal than policies or standards.
  2. A. It does not matter how frequent a loss is projected (only once every 60 years, in this case). What does matter is that each occurrence will be disastrous: SLE (single loss expectancy) is equal to asset value (AV) times exposure factor (EF). In this case, asset value is $2 million and the exposure factor is 1.
  3. D. ALE (annual loss expectancy) is equal to the SLE times the annualized rate of occurrence. In this case, the SLE is $2 million and the ...

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