What will be the annualized loss expectancy?

An asset with a value of $600,000 is subject to a successful malicious attack threat twice a year. The asset has an exposure of 30 percent to the threat.

What will be the annualized loss expectancy?
A . $360,000
B . $180,000
C . $280,000
D . $540,000

View Answer

Answer: A

Explanation:

The annualized loss expectancy will be $360,000. Annualized loss expectancy (ALE) is the annually expected financial loss to an organization from a threat. 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 follows:

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

Here, it is as follows:

SLE = Asset value * EF (Exposure factor)

= 600,000 * (30/100)

= 600,000 * 0.30

= 180,000

= 180,000 * 2

= 360,000

ANS: C, B, and D are incorrect. These are not valid answers.