The annualized loss expectancy (ALE) is the product of the annual rate of occurrence (ARO) and the single loss expectancy

Single loss expectancy

Single Loss Expectancy is a term related to Risk Management and Risk Assessment. It can be defined as the monetary value expected from the occurrence of a risk on an asset.It is mathematically expressed as:...

. It is mathematically expressed as:


Suppose than an asset is valued at $100,000, and the exposure factor

Exposure Factor

Exposure Factor is the subjective, potential percentage of loss to a specific asset if a specific threat is realized. The exposure factor is a subjective value that the person assessing risk must define....

 (EF) for this asset is 25%. The single loss expectancy

Single loss expectancy

Single Loss Expectancy is a term related to Risk Management and Risk Assessment. It can be defined as the monetary value expected from the occurrence of a risk on an asset.It is mathematically expressed as:...

 (SLE) then, is 25% * $100,000, or $25,000.

The annualized loss expectancy is the product of the annual rate of occurrence (ARO) and the single loss expectancy

Single loss expectancy

Single Loss Expectancy is a term related to Risk Management and Risk Assessment. It can be defined as the monetary value expected from the occurrence of a risk on an asset.It is mathematically expressed as:...

.
ALE = ARO * SLE

For an annual rate of occurrence of one, the annualized loss expectancy is 1 * $25,000, or $25,000.

For an ARO of three, the equation is:
ALE = 3 * $25,000

Therefore:
ALE = $75,000