# Annualized loss expectancy (Ofer Abarbanel online library)

The annualized loss expectancy (ALE) is the product of the annual rate of occurrence (ARO) and the single loss expectancy (SLE). It is mathematically expressed as:

ALE = ARO x 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 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

Ofer Abarbanel online library