Which one of the following represents an ALE calculation?

The correct answer is A. single loss expectancy x annualized rate of occurrence. ALE (Annual Loss Expectancy) is calculated as: ALE = SLE × ARO, where SLE (Single Loss Expectancy) is the monetary loss from a single occurrence of a risk event, and ARO (Annualized Rate of Occurrence) is the estimated frequency of that event per year. This formula is…

Submitted by asante_acc· Apr 18, 2026Risk Identification, Monitoring and Analysis

Question

Options

Asingle loss expectancy x annualized rate of occurrence.
Bgross loss expectancy x loss frequency.
Cactual replacement cost - proceeds of salvage.
Dasset value x loss expectancy.

How the community answered

(21 responses)

A
90% (19)
B
5% (1)
C
5% (1)

Explanation

ALE (Annual Loss Expectancy) is calculated as: ALE = SLE × ARO, where SLE (Single Loss Expectancy) is the monetary loss from a single occurrence of a risk event, and ARO (Annualized Rate of Occurrence) is the estimated frequency of that event per year. This formula is foundational to quantitative risk analysis, enabling organizations to prioritize security investments based on expected annual financial exposure.

Topics

#Risk Management#Quantitative Risk Analysis#Annualized Loss Expectancy#Risk Calculation

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