Annualized Loss Expectancy
Encyclopedia
The annualized loss expectancy (ALE) is the product of the annual rate of occurrence (ARO) and the single loss expectancy
Single loss expectancy
Single Loss Expectancy is a term related to Risk Management and Risk Assessment. It can be defined as the monetary value expected from the occurrence of a risk on an asset.It is mathematically expressed as:...

. It is mathematically expressed as:


Suppose than an asset is valued at $100,000, and the exposure factor
Exposure Factor
Exposure Factor is the subjective, potential percentage of loss to a specific asset if a specific threat is realized. The exposure factor is a subjective value that the person assessing risk must define....

 (EF) for this asset is 25%. The single loss expectancy
Single loss expectancy
Single Loss Expectancy is a term related to Risk Management and Risk Assessment. It can be defined as the monetary value expected from the occurrence of a risk on an asset.It is mathematically expressed as:...

 (SLE) then, is 25% * $100,000, or $25,000.

The annualized loss expectancy is the product of the annual rate of occurrence (ARO) and the single loss expectancy
Single loss expectancy
Single Loss Expectancy is a term related to Risk Management and Risk Assessment. It can be defined as the monetary value expected from the occurrence of a risk on an asset.It is mathematically expressed as:...

.
ALE = ARO * SLE

For an annual rate of occurrence of one, the annualized loss expectancy is 1 * $25,000, or $25,000.

For an ARO of three, the equation is:
ALE = 3 * $25,000

Therefore:
ALE = $75,000
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