ALE is a quantitative risk analysis metric used to estimate the annual financial impact of a risk.
Formula: ALE = Annual Rate of Occurrence (ARO) × Single Loss Expectancy (SLE)
Key Components
Annual Rate of Occurrence (ARO): The estimated frequency of a specific risk occurring in a year.
Single Loss Expectancy (SLE): The financial impact of a single occurrence of the risk, calculated as Asset Value × Exposure Factor.
Comparison of Options
A. Annual Rate of Occurrence and Asset Value: Asset Value is used indirectly in SLE but not directly with ARO.
B. Single Loss Expectancy and Exposure Factor: These factors combine to calculate SLE, not ALE.
C. Safeguard Value and Annual Rate of Occurrence: Safeguard Value is unrelated to ALE calculation.
EC-Council References
EC-Council frameworks and CISO resources consistently highlight ALE as a critical tool for financial risk assessment.
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