The Single Loss Expectancy is $1,000,000 and the Annual Rate of Occurrence is 20%. What is the Annualized Loss Expectancy?

The Single Loss Expectancy is $1,000,000 and the Annual Rate of Occurrence is 20%. What is the Annualized Loss Expectancy?

• A. A. $1,000,000
• B. B. $200,000
• C. C. $2,000,000
• D. D. $10,000

Answer: (B)

To calculate the Annualized Loss Expectancy (ALE), you can use the formula: Annualized Loss Expectancy = Single Loss Expectancy × Annual Rate of Occurrence In this scenario, the Single Loss Expectancy (SLE) is $1,000,000, and the Annual Rate of Occurrence (ARO) is 20%, or 0.20 when expressed as a decimal. Using the formula: ALE = SLE × ARO ALE = $1,000,000 × 0.20 ALE = $200,000 Thus, the Annualized Loss Expectancy, which reflects the expected annual losses due to a specific risk, is calculated to be $200,000. This figure helps organizations determine the financial impact of potential risks and aids in prioritizing risk management efforts effectively.

To calculate the Annualized Loss Expectancy (ALE), you can use the formula:

Annualized Loss Expectancy = Single Loss Expectancy × Annual Rate of Occurrence

In this scenario, the Single Loss Expectancy (SLE) is $1,000,000, and the Annual Rate of Occurrence (ARO) is 20%, or 0.20 when expressed as a decimal.

Using the formula:

ALE = SLE × ARO

ALE = $1,000,000 × 0.20

ALE = $200,000

Thus, the Annualized Loss Expectancy, which reflects the expected annual losses due to a specific risk, is calculated to be $200,000. This figure helps organizations determine the financial impact of potential risks and aids in prioritizing risk management efforts effectively.