Calculate Annualized Loss Expectancy
Question
Della work as a project manager for BlueWell Inc.
A threat with a dollar value of $250,000 is expected to happen in her project and the frequency of threat occurrence per year is 0.01
What will be the annualized loss expectancy in her project?
Answers
Explanations
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A. B. C. D.Answer: D, C, and A are incorrect.
These are not valid answers.
The annualized loss expectancy in her project will be $2,500
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: ALE = SLE * ARO - = 250,000 * 0.01 = 2,500
Annualized Loss Expectancy (ALE) is a measure of the expected monetary loss that can be caused by a threat over a year. It is calculated by multiplying the Single Loss Expectancy (SLE) by the Annual Rate of Occurrence (ARO).
Single Loss Expectancy (SLE) is the expected monetary loss that can occur when a threat is realized. It is calculated by multiplying the asset value by the exposure factor.
The formula to calculate Annualized Loss Expectancy (ALE) is:
ALE = SLE * ARO
Given: Threat value (T) = $250,000 Frequency of occurrence (F) = 0.01
The formula to calculate Single Loss Expectancy (SLE) is:
SLE = T * EF
Assuming the Exposure Factor (EF) to be 1 for simplicity, SLE can be calculated as follows:
SLE = $250,000 * 1 = $250,000
The formula to calculate Annualized Rate of Occurrence (ARO) is:
ARO = 1 / F
ARO can be calculated as follows:
ARO = 1 / 0.01 = 100
Substituting the values of SLE and ARO in the formula to calculate Annualized Loss Expectancy (ALE), we get:
ALE = SLE * ARO = $250,000 * 100 = $25,000,000
Therefore, the annualized loss expectancy in Della's project is $25,000,000. However, this is not one of the answer options provided.
The closest option to the calculated value is option C. $3,510. However, this seems to be an incorrect option and the correct option should be D. $3,500. It is unclear if this discrepancy is intentional or a mistake.
