312-50V11 · Question #486
The chance of a hard drive failure is known to be once every four years. The cost of a new hard drive is $500. EF (Exposure Factor) is about 0.5. Calculate for the Annualized Loss Expectancy (ALE).
The correct answer is A. $62.5. ALE is calculated as SLE multiplied by ARO; applying the formula yields $62.50 using the given asset value, exposure factor, and failure frequency.
Question
The chance of a hard drive failure is known to be once every four years. The cost of a new hard drive is $500. EF (Exposure Factor) is about 0.5. Calculate for the Annualized Loss Expectancy (ALE).
Options
- A$62.5
- B$250
- C$125
- D$65.2
How the community answered
(28 responses)- A79% (22)
- B7% (2)
- C11% (3)
- D4% (1)
Why each option
ALE is calculated as SLE multiplied by ARO; applying the formula yields $62.50 using the given asset value, exposure factor, and failure frequency.
SLE (Single Loss Expectancy) = Asset Value x EF = $500 x 0.5 = $250. ARO (Annual Rate of Occurrence) = 1 failure per 4 years = 0.25. ALE = SLE x ARO = $250 x 0.25 = $62.50. This is the standard quantitative risk formula defined in NIST SP 800-30.
$250 is only the SLE and does not incorporate the ARO of 0.25, so it overstates the annualized loss by ignoring how frequently the event occurs per year.
$125 results from incorrectly using an ARO of 0.5 (dividing by 2 instead of 4), misrepresenting a once-every-four-years event as twice as frequent.
$65.2 does not correspond to any correct application of the ALE, SLE, or ARO formula using the values provided.
Concept tested: Quantitative risk analysis - ALE formula calculation
Source: https://csrc.nist.gov/publications/detail/sp/800-30/rev-1/final
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