Cisco Certified Support Technician (CCST) CybersecurityRisk ManagementMedium
A financial institution is performing a quantitative risk assessment for its online banking platform. They have determined that the Single Loss Expectancy (SLE) for a data breach event is $500,000. Historical data indicates that such an event is expected to occur once every five years. What is the Annualized Loss Expectancy (ALE) for this specific risk?
- A$250,000
- B$100,000
- C$500,000
- D$50,000
Show answer & explanationAnswer & explanation
Correct answer: B. $100,000
The Annualized Loss Expectancy (ALE) is calculated by multiplying the Single Loss Expectancy (SLE) by the Annualized Rate of Occurrence (ARO). If an event occurs once every five years, its ARO is 1/5 or 0.2. Therefore, ALE = $500,000 * 0.2 = $100,000.
Why the other options are wrong
- A. Incorrect calculation; this would be ARO of 0.5.
- C. This represents the SLE, not the ALE.
- D. Incorrect calculation; this would be ARO of 0.1.
Annualized Loss Expectancy (ALE)
The expected monetary loss for an asset or a set of assets due to a specific risk over a one-year period.
- Calculated as SLE multiplied by ARO.
- Used in quantitative risk assessment.
- Helps prioritize risks based on financial impact.
Memory trick: ALE is the total annual bill for a specific risk.