How can you calculate the Annualized Loss Expectancy (ALE) that may occur due to a threat?

The correct answer is D. Single Loss Expectancy (SLE) X Annualized Rate of Occurrence (ARO). ALE = Single Loss Expectancy (SLE) × Annualized Rate of Occurrence (ARO). SLE is the monetary loss expected from a single occurrence of a risk event (calculated as Asset Value × Exposure Factor). ARO is the estimated frequency with which that event is expected to occur per year.

Security Leadership and Management

Question

Options

ASingle Loss Expectancy (SLE)/ Exposure Factor (EF)
BAsset Value X Exposure Factor (EF)
CExposure Factor (EF)/Single Loss Expectancy (SLE)
DSingle Loss Expectancy (SLE) X Annualized Rate of Occurrence (ARO)

How the community answered

(30 responses)

B
3% (1)
C
3% (1)
D
93% (28)

Explanation

ALE = Single Loss Expectancy (SLE) × Annualized Rate of Occurrence (ARO). SLE is the monetary loss expected from a single occurrence of a risk event (calculated as Asset Value × Exposure Factor). ARO is the estimated frequency with which that event is expected to occur per year. Multiplying them gives the annualized financial impact, which organizations use to justify security control spending. Option B describes the formula for SLE itself (Asset Value × EF), not ALE. Options A and C are not valid risk formulas. The ALE formula is a cornerstone of quantitative risk analysis in frameworks like CISSP.

Topics

#Annualized Loss Expectancy (ALE)#Risk Management#Quantitative Risk Analysis#Loss Expectancy

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