Read this page and watch the video to learn more about the purpose of risk management and the four stages of the risk management process. Before you move on, make sure you have a good understanding of the formulas, and that you are able to use the formulas on this page to calculate single loss expectancy (SLE), annual rate of occurrence (ARO), and annual loss expectancy (ALE).
Table 1: Calculation of Annualized Loss Expectancy
Asset | Threat | Asset Value | EF | SLE | ARO | ALE |
---|---|---|---|---|---|---|
File Server | Virus every year | $15,000 | .20 | 3,000 | ½ (.5) | 1,500 |
Operation Center | Hurricane every 10 years | $1,000,000 | .90 | 900,000 | 1/5 (.2) | 180,000 |
Formulas: