Acme Widgets Company has an asset valued at $1,000,000. What is the highest amount they should spend annually on countermeasures against a threat that has an annualized rate of occurrence (ARO) of 5 percent and an exposure factor (EF) of 30 percent?

A.
$300,000

B.
$150,000

C.
$15,000

D.
$1,500

Explanation:
The cost of the countermeasure should not be greater than the cost of
replacing the asset it protects. In this case, an asset valued at $1,000,000 with an
exposure factor of 30 percent gives an SLE of $300,000. With an ARO of 5 percent,
the annualized loss expectancy (ALE) is $300,000 multiplied by .05 or $15,000.