CompTIA CySA+ Practice Test

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What is the annual loss expectancy (ALE) if the single loss expectancy (SLE) is $36,000 and the annual rate of occurrence (ARO) is 0.25?

$9,000
$36,000
$90,000
$360,000

The correct answer is: $9,000

The annual loss expectancy (ALE) is a key metric used in risk management to estimate the expected monetary loss due to a risk factor over a year. To calculate the ALE, the formula is: ALE = Single Loss Expectancy (SLE) × Annual Rate of Occurrence (ARO) In this case, the single loss expectancy is $36,000, and the annual rate of occurrence is 0.25. Applying the formula: ALE = $36,000 × 0.25 ALE = $9,000 Therefore, the annual loss expectancy for this scenario is $9,000. This means that, on average, one can expect to lose $9,000 annually due to the identified risk. Understanding ALE is crucial for organizations to make informed decisions about risk management and resource allocation. This metric helps prioritize risks based on financial impact, enabling effective budgeting for mitigating potential losses.