You are calculating the Annualized Loss Expectancy (ALE) using the following formula: ALE=AV EF ARO What information does the AV (Asset Value) convey?

Question

Options

• AIt represents how many times per year a specific threat occurs.
• BIt represents the percentage of loss that an asset experiences if an anticipated threat occurs.
• CIt is expected loss for an asset due to a risk over a one year period.
• DIt represents the total cost of an asset, including the purchase price, recurring maintenance,

• B
  6% (2)
• C
  3% (1)
• D
  91% (32)

Explanation

Asset Value (AV) represents the total cost of an asset, encompassing not just the purchase price but also recurring maintenance, support, and any other costs associated with owning or replacing it - this is why D is correct. It provides the monetary baseline from which loss calculations are derived.

• A is wrong - that describes ARO (Annualized Rate of Occurrence), the frequency component of the formula.
• B is wrong - that describes EF (Exposure Factor), the percentage of asset value lost in a single incident.
• C is wrong - that describes ALE itself, the final output of the formula, not one of its inputs.

Memory tip: Think of AV as the "price tag" on what you're protecting. ARO = how often, EF = how much percentage lost, AV = what it's worth - multiply all three and you get ALE, your annual expected loss in dollars.

No community discussion yet for this question.