Final answer:
The value of a safeguard is calculated using the formula: ALE before safeguard - ALE after implementing the safeguard - annual cost of safeguard. This takes into account the reduction in potential losses due to the safeguard and the costs of implementing and maintaining it, offering a net savings perspective. Choice B is the correct answer.
Step-by-step explanation:
The calculation of the value of a safeguard to a company is an aspect of risk management where the focus is on understanding the cost-benefit of implementing a particular security control or safeguard. Generally, it involves assessing how much risk is mitigated by the safeguard and the cost of implementing and maintaining the safeguard. To calculate the value of a safeguard, one might look at the Annual Loss Expectancy (ALE) before and after the safeguard is in place. The ALE is the expected monetary loss that can be anticipated for an asset due to a risk over a one-year period. The formula that is often used for such calculations is the Annual Cost of Safeguard (ACS) approach.
Choice B is the correct option for calculating the value of a safeguard. It is given by the formula: ALE before safeguard - ALE after implementing the safeguard - annual cost of safeguard. This reflects the net savings from implementing the safeguard, taking into account both the reduction in loss expectancy and the cost of the safeguard itself. Comparing ALE before and after a safeguard helps to determine if the cost of implementing the security measure is justified by a significant enough reduction in potential loss. Therefore, when considering adding a safeguard, it's important to conduct this cost-benefit analysis to make sure that the investment will result in a net positive effect on the company's risk profile.