Certified Information Systems Security Professional (CISSP) Practice Exam 2025 – All-in-One Guide to Mastering Your Certification!

Loss expectancy refers to the anticipated financial impact resulting from a single loss event within the context of risk management. This concept is crucial for understanding how various risks can affect an organization, allowing for better preparation and mitigation strategies.

When organizations assess risks, they often need to quantify the potential impact of those risks materializing. Loss expectancy provides a way to estimate this impact by considering factors such as the potential frequency of the loss and the likely severity of the financial consequences.

In a broader sense, this term helps decision-makers justify investments in security measures by comparing the loss expectancy against the cost of potential security strategies. By focusing on a specific loss event, organizations are better equipped to allocate resources where they are most needed to manage and mitigate risks effectively.

The other terms, while related to overall risk assessment, do not accurately depict the specific concept of anticipated impact from a single incident. For instance, total cost incurred from all risks combines multiple factors, while frequency addresses how often losses may occur rather than their financial impact on a single event. An overall risk assessment score encompasses various risk factors but does not hone in on an individual loss expectancy.