Annualized loss expectancy
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The annualized loss expectancy (ALE) is the product of the
annual rate of occurrence Broadly speaking, a risk assessment is the combined effort of: # identifying and analyzing potential (future) events that may negatively impact individuals, assets, and/or the environment (i.e. hazard analysis); and # making judgments "on the to ...
(ARO) and the
single loss expectancy Single-loss expectancy (SLE) is the monetary value expected from the occurrence of a risk on an asset. It is related to risk management and risk assessment. Single-loss expectancy is mathematically expressed as: = \times Where the exposure f ...
(SLE). It is mathematically expressed as: : \text = \text \times \text Suppose that an asset is valued at $100,000, and the
Exposure Factor Exposure factor (EF) 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 In simple terms, risk is the possibility of some ...
(EF) for this asset is 25%. The
single loss expectancy Single-loss expectancy (SLE) is the monetary value expected from the occurrence of a risk on an asset. It is related to risk management and risk assessment. Single-loss expectancy is mathematically expressed as: = \times Where the exposure f ...
(SLE) then, is 25% * $100,000, or $25,000. The annualized loss expectancy is the product of the
annual rate of occurrence Broadly speaking, a risk assessment is the combined effort of: # identifying and analyzing potential (future) events that may negatively impact individuals, assets, and/or the environment (i.e. hazard analysis); and # making judgments "on the to ...
(ARO) and the
single loss expectancy Single-loss expectancy (SLE) is the monetary value expected from the occurrence of a risk on an asset. It is related to risk management and risk assessment. Single-loss expectancy is mathematically expressed as: = \times Where the exposure f ...
. ALE = ARO * SLE For an annual rate of occurrence of 1, the annualized loss expectancy is 1 * $25,000, or $25,000. For an ARO of 3, the equation is: ALE = 3 * $25,000. Therefore: ALE = $75,000


See also

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Single loss expectancy Single-loss expectancy (SLE) is the monetary value expected from the occurrence of a risk on an asset. It is related to risk management and risk assessment. Single-loss expectancy is mathematically expressed as: = \times Where the exposure f ...


References

{{Reflist Financial risk