Exposure factor (EF) is the subjective, potential percentage of loss to a specific asset if a specific threat is realized. The exposure factor is a subjective value that the person assessing risk must define.
Single – loss expectancy (SLE) = Asset value (AV) x Exposure factor (EF)
The exposure factor is represented in the impact of the risk over the asset, or percentage of asset lost. As an example, if the asset value is reduced two thirds, the exposure factor value is 0.66. If the asset is completely lost, the exposure factor is 1.0.
Ofer Abarbanel is a 25 year securities lending broker and expert who has advised many Israeli regulators, among them the Israel Tax Authority, with respect to stock loans, repurchase agreements and credit derivatives. Founder of TBIL.co STATX Fund.