The cost of a countermeasure should not be greater in cost than the risk it mitigates (ALE). For a quantitative risk assessment, the equation is ALE = ARO x SLE where the SLE is calculated as the product of asset value x exposure factor. An event that happen once every five years would have an ARO of .2 (1 divided by 5).

SLE = Asset Value (AV) x Exposure Fact (EF)

SLE = 1,000,000 x .30 = 300,000

ALE = SLE x Annualized Rate of Occurance (ARO)

ALE = 300,000 x .2 = 60,000

Know your acronyms:

ALE -- Annual loss expectancy

ARO -- Annual rate of occurrence

SLE -- Single loss expectancy

The following are incorrect answers:

$300,000 is incorrect. See the explanation of the correct answer for the correct calculation.

$150,000 is incorrect. See the explanation of the correct answer for the correct calculation.

$1,500 is incorrect. See the explanation of the correct answer for the correct calculation.

Reference(s) used for this question:

Mc Graw Hill, Shon Harris, CISSP All In One (AIO) book, Sixth Edition , Pages 87-88

and

Official ISC2 Guide to the CISSP Exam, (OIG), Pages 60-61