The cost of mitigating a risk should not exceed which of the following?

The cost of mitigating a risk should not exceed which of the following?

• A. Expected benefit to be derived
• B. Annual loss expectancy (ALE)
• C. Value of the physical asset
• D. Cost to exploit the weakness

Answer: (A)

The rationale for selecting the expected benefit to be derived as the threshold for the cost of mitigating a risk is rooted in the principle of cost-effectiveness in risk management. When considering risk mitigation strategies, it is essential to ensure that the costs associated with implementing these strategies do not surpass the expected benefits they will yield. This approach aligns with the fundamental goal of risk management, which is to improve the organization's overall security posture without incurring excessive expenses. For instance, if the expected benefits—such as a reduction in potential losses, improved compliance, or enhanced reputation—are calculated, these benefits should provide a clear benchmark. By limiting the mitigation cost to the expected benefits, organizations can make informed decisions that prioritize resource allocation efficiently. This principle underscores the importance of conducting a thorough cost-benefit analysis when planning risk responses. It allows organizations to prioritize high-risk areas where the benefits of mitigation justify the expense and to avoid squandering resources on less critical risks where the benefits do not warrant the costs.

The rationale for selecting the expected benefit to be derived as the threshold for the cost of mitigating a risk is rooted in the principle of cost-effectiveness in risk management. When considering risk mitigation strategies, it is essential to ensure that the costs associated with implementing these strategies do not surpass the expected benefits they will yield. This approach aligns with the fundamental goal of risk management, which is to improve the organization's overall security posture without incurring excessive expenses.

For instance, if the expected benefits—such as a reduction in potential losses, improved compliance, or enhanced reputation—are calculated, these benefits should provide a clear benchmark. By limiting the mitigation cost to the expected benefits, organizations can make informed decisions that prioritize resource allocation efficiently.

This principle underscores the importance of conducting a thorough cost-benefit analysis when planning risk responses. It allows organizations to prioritize high-risk areas where the benefits of mitigation justify the expense and to avoid squandering resources on less critical risks where the benefits do not warrant the costs.