What will be the Single Loss Expectancy of this project?

You are the project manager of the HGT project in Bluewell Inc. The project has an asset valued at

$125,000 and is subjected to an exposure factor of 25 percent.

What will be the Single Loss Expectancy of this project?
A . $ 125,025
B . $ 31,250
C . $ 5,000
D . $ 3,125,000

View Answer

Answer: B

Explanation:

The Single Loss Expectancy (SLE) of this project will be $31,250.

Single Loss Expectancy is a term related to Quantitative Risk Assessment. It can be defined as the monetary value expected from the occurrence of a risk on an asset. It is mathematically expressed as follows:

Single Loss Expectancy (SLE) = Asset Value (AV) * Exposure Factor (EF)

where the Exposure Factor represents the impact of the risk over the asset, or percentage of asset lost. As an example, if the Asset Value is reduced two third, the exposure factor value is .66. If the asset is completely lost, the Exposure Factor is 1.0. The result is a monetary value in the same unit as the Single Loss Expectancy is expressed.

Therefore,

SLE = Asset Value * Exposure Factor

=- 125,000 * 0.25

=- $31,250

Incorrect Answers:

A, C, D: These are not SLEs of this project.