How is Annualized Loss Expectancy (ALE) derived from a threat?

The correct answer is B. SLE x ARO. ALE is calculated as: ALE = SLE × ARO. Single Loss Expectancy (SLE) represents the monetary loss expected from a single occurrence of a threat and is itself derived from: SLE = Asset Value (AV) × Exposure Factor (EF). Annualized Rate of Occurrence (ARO) is the estimated frequency

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

Question

Options

AARO x (SLE - EF)
BSLE x ARO
CSLE/EF
DAV x EF

How the community answered

(33 responses)

A
6% (2)
B
88% (29)
C
3% (1)
D
3% (1)

Explanation

ALE is calculated as: ALE = SLE × ARO. Single Loss Expectancy (SLE) represents the monetary loss expected from a single occurrence of a threat and is itself derived from: SLE = Asset Value (AV) × Exposure Factor (EF). Annualized Rate of Occurrence (ARO) is the estimated frequency with which a threat is expected to occur within a year. Multiplying SLE by ARO yields the expected annual monetary loss. Option A is incorrect (ARO × (SLE - EF) has no standard meaning). Option C (SLE/EF) reverses the SLE formula. Option D (AV × EF) is the formula for SLE, not ALE.

Topics

#Risk Management#Quantitative Risk Analysis#Annualized Loss Expectancy#ALE calculation

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