GSLC · Question #175
How can you calculate the Annualized Loss Expectancy (ALE) that may occur due to a threat?
The correct answer is A. Single Loss Expectancy (SLE) X Annualized Rate of Occurrence (ARO). ALE quantifies the expected annual financial loss from a threat using the formula ALE = SLE x ARO.
Question
How can you calculate the Annualized Loss Expectancy (ALE) that may occur due to a threat?
Options
- ASingle Loss Expectancy (SLE) X Annualized Rate of Occurrence (ARO)
- BSingle Loss Expectancy (SLE)/ Exposure Factor (EF)
- CAsset Value X Exposure Factor (EF)
- DExposure Factor (EF)/Single Loss Expectancy (SLE)
How the community answered
(49 responses)- A92% (45)
- B2% (1)
- C4% (2)
- D2% (1)
Why each option
ALE quantifies the expected annual financial loss from a threat using the formula ALE = SLE x ARO.
Annualized Loss Expectancy (ALE) is calculated by multiplying Single Loss Expectancy (SLE) - the monetary loss from one occurrence - by the Annualized Rate of Occurrence (ARO), which expresses how many times the threat is expected to occur per year. This formula is a foundational risk calculation in security frameworks such as NIST SP 800-30 and CISSP. For example, an SLE of $10,000 with an ARO of 0.5 yields an ALE of $5,000.
Dividing SLE by Exposure Factor reverses the correct SLE formula and produces no recognized risk metric.
Asset Value multiplied by Exposure Factor calculates SLE, not ALE.
Dividing Exposure Factor by SLE has no meaning in any standard risk quantification formula.
Concept tested: ALE quantitative risk formula calculation
Source: https://csrc.nist.gov/publications/detail/sp/800-30/rev-1/final
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