Annualized loss expectancy

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The annualized loss expectancy (ALE) {{Cite web|url=https://www.riskythinking.com/glossary/annualized_loss_expectancy.php|title=Annualized Loss Expectancy}} is the product of the annual rate of occurrence (ARO) and the single loss expectancy (SLE). It is mathematically expressed as:

:$\backslash text\{ALE\}\; =\; \backslash text\{ARO\}\; \backslash times\; \backslash text\{SLE\}$

Suppose that an asset is valued at $100,000, and the Exposure Factor (EF) for this asset is 25%. The single loss expectancy (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.

ALE = ARO * SLE

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

For an ARO of 3, the equation is:

ALE = 3 * $25,000. Therefore:

ALE = $75,000