ISC2 Exam ISSMP Topic 3 Question 49 Discussion

The Annualized Loss Expectancy (ALE) that occurs due to a threat can be calculated by multiplying the Single Loss Expectancy (SLE) with the Annualized Rate of Occurrence (ARO).

Annualized Loss Expectancy (ALE) = Single Loss Expectancy (SLE) X Annualized Rate of Occurrence (ARO)

Annualized Rate of Occurrence (ARO) is a number that represents the estimated frequency in which a threat is expected to occur. It is calculated based upon the probability of the event occurring and the number of employees that could make that event occur.

Single Loss Expectancy (SLE) is the value in dollars that is assigned to a single event. SLE can be calculated by the following formula.

SLE = Asset Value ($) X Exposure Factor (EF)

The Exposure Factor (EF) represents the % of assets loss caused by a threat. The EF is required to calculate Single Loss Expectancy (SLE).