 | This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. Find sources: "Annualized loss expectancy" – news · newspapers · books · scholar · JSTOR (January 2021) (Learn how and when to remove this message) |
The annualized loss expectancy (ALE) is the product of the annual rate of occurrence (ARO) and the single loss expectancy (SLE). It is mathematically expressed as:
Suppose that an asset is valued at $100,000, and the Exposure Factor (EF) for this asset is 25%. The single loss expectancy (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. 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