Annual Loss Expectancy (ALE) is calculated by multiplying the impact of a potential loss (measured in financial terms) by the frequency of the loss event (how often it is expected to occur annually). This formula helps prioritize risks and allocate resources to mitigate the most significant threats.
Formula:ALE=Single Loss Expectancy (SLE)×Annual Rate of Occurrence (ARO)\text{ALE} = \text{Single Loss Expectancy (SLE)} \times \text{Annual Rate of Occurrence (ARO)}ALE=Single Loss Expectancy (SLE)×Annual Rate of Occurrence (ARO)
ASIS Certified Protection Professional (CPP®) References:
Risk Assessment and Cost Analysis: CPP materials include ALE calculations as a core component of financial risk management.
Security Program Justification: ALE is used to demonstrate the financial value of security measures in mitigating risks.
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