Which calculation is used to determine the Annual Loss Expectancy (ALE) from the Single Loss Expectancy (SLE) and the Annualized Rate of Occurrence (ARO)?

Which calculation is used to determine the Annual Loss Expectancy (ALE) from the Single Loss Expectancy (SLE) and the Annualized Rate of Occurrence (ARO)?

• A. SLE x ARO
• B. AV x ARO
• C. SLE x AV
• D. ALE x ARO

Answer: (A)

ALE represents the expected annual monetary loss from security incidents. To determine it, you multiply the loss that would occur from a single incident (SLE) by how many such incidents are expected to occur in a year (ARO). So, ALE = SLE × ARO. AV is used to derive SLE in the first place (SLE often equals AV times the exposure factor), but it isn’t multiplied with ARO to find ALE. Multiplying SLE by AV or multiplying ALE by ARO would misapply the values and misstate the yearly loss.

ALE represents the expected annual monetary loss from security incidents. To determine it, you multiply the loss that would occur from a single incident (SLE) by how many such incidents are expected to occur in a year (ARO). So, ALE = SLE × ARO.

AV is used to derive SLE in the first place (SLE often equals AV times the exposure factor), but it isn’t multiplied with ARO to find ALE. Multiplying SLE by AV or multiplying ALE by ARO would misapply the values and misstate the yearly loss.