Risk Analysis

Question 1

Single Loss Expectancy (SLE)

Answer 1

Definition: The cost of a single security incident.
Formula: SLE=AV×EF

AV (Asset Value): How much the asset is worth.
EF (Exposure Factor): Percentage of asset value lost.

Question 2

Annual Rate of Occurrence (ARO)

Answer 2

Definition: How often the incident occurs each year.
Example: If a specific event happens once every 4 years, ARO = 0.25.

Question 3

Annualized Loss Expectancy (ALE)

Answer 3

Definition: The cost per year if no action is taken.
Formula: ALE=SLE×ARO