The failure method that would best prioritize security in the event of failure is fail-closed. Fail-closed is a failure mode that blocks or denies all access when a system or a component fails or malfunctions. Fail-closed is also known as fail-secure or fail-safe, as it prevents unauthorized or malicious access and preserves the confidentiality and integrity of the system or the data. Fail-closed is suitable for systems or components that handle sensitive or critical information or operations, and where security is more important than availability.
Fail-open is a failure mode that allows or grants all access when a system or a component fails or malfunctions. Fail-open is also known as fail-insecure or fail-soft, as it enables authorized or legitimate access and preserves the availability and functionality of the system or the data. Fail-open is suitable for systems or components that handle non-sensitive or non-critical information or operations, and where availability is more important than security. Failover is a failure mode that switches or transfers the access to a backup or redundant system or component when the primary system or component fails or malfunctions. Failover is also known as fault tolerance or high availability, as it maintains the continuity and reliability of the system or the data. Failover is suitable for systems or components that handle vital or essential information or operations, and where both security and availability are equally important. References: [CISSP CBK Reference, 5th Edition, Chapter 7, page 377]; [CISSP All-in-One Exam Guide, 8th Edition, Chapter 7, page 357]

The /etc/hosts.equiv file is saying that every user on the other host is a trusted user and allowed to log into this host without authentication (i.e. NO PASSWORD). The only thing that must exist for a user to log in to this system is an /etc/passwd entry by the same login name the user is currently using. In other words, if there is a user trying to log into this system whose login name is "bhope", then there must be a "bhope" listed in the /etc/passwd file.

This the best of the four answers as a defense that depends on multiple layers is superior to one where all protection is embedded in a single layer (e.g., a firewall). Defense in
depth would include all categories of controls.
The Following answers are incorrect:
"Concept of a pass through device that only allows certain traffic in and out" is incorrect. This is
one definition of a firewall which can be a component of a defense in depth strategy in
combination with other measures.
"Concept of preventative controls" is incorrect. This is a component of a defense in depth strategy
but the core concept is that there must be multiple layers of defenses.
"Concept of defensive controls" is incorrect. This is a component of a defense in depth strategy
but the core concept is that there must be multiple layers of defenses.
References:
http://en.wikipedia.org/wiki/Defense_in_depth_(computing)
http://www.nsa.gov/snac/support/defenseindepth.pdf

DIACAP DITSCAP has been replaced by DIACAP (DoD Information Assurance Certification and Accreditation Process) effective Nov 2007 for C&A within the Department of Defense.
The DoD Information Assurance Certification and Accreditation Process (DIACAP) is the United States Department of Defense (DoD) process to ensure that risk management is applied on information systems (IS). DIACAP defines a DoD-wide formal and standard set of activities, general tasks and a management structure process for the certification and accreditation (C&A) of a DoD IS that will maintain the information assurance (IA) posture throughout the system's life cycle. An interim version of the DIACAP was signed July 6, 2006 and superseded DITSCAP. The final version is titled Department of Defense Instruction 8510.01 and was signed on November 28, 2007. It supersedes the Interim DIACAP Guidance.
NIACAP National Information Assurance Certification and Accreditation Process (NIACAP), establishes the minimum national standards for certifying and accrediting national security systems. This process
provides a standard set of activities, general tasks, and a management structure to certify and
accredit systems that will maintain the Information Assurance (IA) and security posture of a
system or site.
HIPAA
The HIPAA legislation had four primary objectives:
(1)
Assure health insurance portability by eliminating job-lock due to pre-existing medical conditions,
(2)
Reduce healthcare fraud and abuse,
(3)
Enforce standards for health information and
(4)
Guarantee security and privacy of health information.
TCSEC
The TCSEC defines a hierarchy of various levels of security functionality and assurance criteria.
Progression up the hierarchy involves the addition of security functionality and more stringent
assurance criteria to enable users to place progressively more trust in the higher rated systems.
REFERENCES:
Source: KRUTZ, Ronald L. & VINES, Russel D., The CISSP Prep Guide: Mastering the Ten
Domains of Computer Security, page 199.
Additional references: National Security Telecommunications and Information Systems Security
Committee, National Information Assurance Certification and Accreditation Process (NIACAP).
And: U.S. Department of Defense, Defense Information Technology Security Certification and
Accreditation Process (DITSCAP).
And: FAGIN, Daniel (SANS Institute), HIPAA Security Standards v1.2d.
And: IBM's Security Solutions Glossary.