Annualized Loss Expectancy (ALE) Derived from a Threat

B.

Three steps are undertaken in a quantitative risk assessment: Initial management approval - Construction of a risk assessment team, and The review of information currently available within the organization.

There are a few formulas that you MUST understand for the exam.See them below: SLE (Single Loss Expectancy) Single loss expectancy (SLE) must be calculated to provide an estimate of loss.SLE is defined as the difference between the original value and the remaining value of an asset after a single exploit.

The formula for calculating SLE is as follows: SLE = asset value (in $)exposure factor (loss due to successful threat exploit, as a %) Losses can include lack of availability of data assets due to data loss, theft, alteration, or denial of service (perhaps due to business continuity or security issues)

ALE (Annualized Loss Expectancy) Next, the organization would calculate the annualized rate of occurrence (ARO)

This is done to provide an accurate calculation of annualized loss expectancy (ALE)

ARO is an estimate of how often a threat will be successful in exploiting a vulnerability over the period of a year.

When this is completed, the organization calculates the annualized loss expectancy (ALE)

The ALE is a product of the yearly estimate for the exploit (ARO) and the loss in value of an asset after an SLE.

The calculation follows ALE = SLE x ARO Note that this calculation can be adjusted for geographical distances using the local annual frequency estimate (LAFE) or the standard annual frequency estimate (SAFE).Given that there is now a value for SLE, it is possible to determine what the organization should spend, if anything, to apply a countermeasure for the risk in question.

Remember that no countermeasure should be greater in cost than the risk it mitigates, transfers, or avoids.

Countermeasure cost per year is easy and straightforward to calculate.

It is simply the cost of the countermeasure divided by the years of its life (i.e., use within the organization).Finally, the organization is able to compare the cost of the risk versus the cost of the countermeasure and make some objective decisions regarding its countermeasure selection.

The following were incorrect answers: All of the other choices were incorrect.

The following reference(s) were used for this quesiton: Hernandez CISSP, Steven (2012-12-21)

Official (ISC)2 Guide to the CISSP CBK, Third Edition ((ISC)2 Press) (Kindle Locations 10048-10069)

Auerbach Publications.

Kindle Edition.

Annualized Loss Expectancy (ALE) is a risk management formula used to calculate the potential cost of a security incident over a year. It takes into account the probability of the threat occurring, the potential loss of assets, and the expected cost of each occurrence.

The formula for calculating ALE from a threat is:

ALE = ARO x (SLE - EF)

where:

ARO = Annual Rate of Occurrence, which is the estimated frequency of the threat occurring in a year.

SLE = Single Loss Expectancy, which is the estimated cost of a single occurrence of the threat.

EF = Exposure Factor, which is the percentage of the asset's value that could be lost in a single occurrence of the threat.

To calculate ALE, you first need to estimate the ARO, SLE, and EF for the specific threat. Once you have these values, you can use the formula to calculate the ALE for that threat.

Option A (ARO x (SLE - EF)) is the correct answer because it is the formula used to calculate ALE from a threat.

Option B (SLE x ARO) is the formula for calculating Annualized Rate of Occurrence (ARO), which is not the same as ALE.

Option C (SLE/EF) is the formula for calculating the total number of occurrences that would result in the total loss of the asset, not ALE.

Option D (AV x EF) is the formula for calculating the Single Loss Expectancy (SLE), not ALE.