Annualized loss expectancy (ALE)
- Term
- Annualized loss expectancy (ALE)
- Exam
- CISM
- Definition
Expected yearly loss from a risk: single loss expectancy multiplied by annualized rate of occurrence.
- Explained
ALE expresses risk in money per year: single loss expectancy (asset value times exposure factor) multiplied by the annualized rate of occurrence. Comparing the ALE before and after a control with the control's annual cost shows whether the control is worth buying.
- In practice
Asset 200,000 × exposure 25% = SLE 50,000; once every two years (ARO 0.5) gives ALE 25,000.
- Often confused with
- Single loss expectancy
- Exam angle
SLE = asset value × exposure factor; ALE = SLE × ARO.
- Related