SY0-301 · Question #853
The annual loss expectancy can be calculated by:
The correct answer is B. Multiplying the annualized rate of return and the single loss expectancy. Annual Loss Expectancy (ALE) is calculated by multiplying the Annualized Rate of Occurrence (ARO) by the Single Loss Expectancy (SLE).
Question
The annual loss expectancy can be calculated by:
Options
- ADividing the annualized rate of return by single loss expectancy.
- BMultiplying the annualized rate of return and the single loss expectancy.
- CSubtracting the single loss expectancy from the annualized rate of return.
- DAdding the single loss expectancy and the annualized rate of return.
How the community answered
(29 responses)- B93% (27)
- C3% (1)
- D3% (1)
Why each option
Annual Loss Expectancy (ALE) is calculated by multiplying the Annualized Rate of Occurrence (ARO) by the Single Loss Expectancy (SLE).
Dividing ARO by SLE produces no recognized risk metric and yields a dimensionally inconsistent result combining frequency and currency units.
The standard risk quantification formula is ALE = ARO x SLE, where SLE is the monetary value of a single loss event and ARO is the estimated frequency of that event per year. Multiplying these two values produces the expected annual financial impact of a given risk, which is used to prioritize security investments.
Subtracting SLE from ARO is mathematically invalid for risk calculation as it subtracts a monetary value from a frequency rate.
Adding SLE and ARO produces no meaningful risk value because the two quantities use incompatible units and no standard risk framework uses this formula.
Concept tested: ALE risk quantification formula (ARO x SLE)
Source: https://csrc.nist.gov/publications/detail/sp/800-30/rev-1/final
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