CompTIA Security+ (SY0-701)Security Program Management and OversightMedium
A company's data center floods on average once every 4 years, causing $250,000 in damage each time. What is the annualized loss expectancy (ALE) for this risk?
- A$1,000,000
- B$250,000
- C$62,500
- D$31,250
Show answer & explanationAnswer & explanation
Correct answer: C. $62,500
ARO = 1/4 = 0.25, SLE = $250,000. ALE = SLE × ARO = $250,000 × 0.25 = $62,500.
Why the other options are wrong
- A. This incorrectly multiplies SLE by 4 instead of dividing.
- B. This is the SLE, not the annualized figure.
- D. This incorrectly halves the correct ALE.
ALE Calculation
Annualized Loss Expectancy (ALE) represents the expected yearly monetary loss from a risk, calculated as SLE multiplied by ARO.
- SLE = Single Loss Expectancy (cost per incident)
- ARO = Annualized Rate of Occurrence (frequency per year)
- ALE = SLE × ARO
Memory trick: Annual Loss = Single Loss times how Often it Recurs