A healthcare organization is conducting a quantitative risk assessment on an unencrypted p… — CompTIA Security+

A healthcare organization is conducting a quantitative risk assessment on an unencrypted portable diagnostic platform. The total asset value ( $AV$ ), including sensitive data asset valuation and regulatory non-compliance exposure, is estimated at $\$600,000$ . Security metrics indicate that a single breach incident would impact $30\%$ of the asset's total value ( $EF = 0.30$ ). Historical threat intelligence indicates that this specific type of breach occurs once every $4$ years ( $ARO = 0.25$ ).

What is the Annual Loss Expectancy ( $ALE$ ) in dollars associated with this security risk?

Answer: 45000 $

Answer

The Annual Loss Expectancy (ALE) for the portable diagnostic platform is $45,000.

Quantitative risk analysis calculates financial risk using the formulas

SLE = AV \times EF

and

ALE = SLE \times ARO

. Given an asset value (

AV

) of

\$600,000

and an exposure factor (

EF

) of

0.30

, the Single Loss Expectancy (

SLE

) is

\$180,000

. With an event frequency of once every 4 years (

ARO = 0.25

), the resulting Annual Loss Expectancy (

ALE

) is

\$180,000 \times 0.25 = \$45,000

Step-by-Step Solution

Calculate the Single Loss Expectancy (SLE)

$180,000

Multiply the total Asset Value ($600,000) by the Exposure Factor (0.30).

Determine the Annualized Rate of Occurrence (ARO)

0.25

An incident expected once every 4 years has an annual frequency of 1/4 = 0.25.

Calculate the Annual Loss Expectancy (ALE)

$45,000

Multiply the SLE ($180,000) by the ARO (0.25).

Key Concept

Quantitative Risk Assessment (ALE Calculation)

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