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A manufacturing enterprise is performing a quantitative risk assessment on its automated build pipeline server fleet. The fleet has an Asset Value (AVAV) of $350,000\$350,000. A risk analysis team determines that a supply chain compromise would yield an Exposure Factor (EFEF) of 30%30\%. Threat intelligence estimates the Annualized Rate of Occurrence (AROARO) for such an attack to be 0.500.50 (occurring once every two years).

What is the Annual Loss Expectancy (ALEALE) in dollars for this asset?

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Answer: 52500

Answer

The Annual Loss Expectancy (ALE) is $52,500.
To calculate the Annual Loss Expectancy (ALEALE), first determine the Single Loss Expectancy (SLE=AV×EFSLE = AV \times EF). With an Asset Value (AVAV) of $350,000\$350,000 and an Exposure Factor (EFEF) of 30%30\% (0.300.30), SLE=$350,000×0.30=$105,000SLE = \$350,000 \times 0.30 = \$105,000. Multiplying SLESLE by the Annualized Rate of Occurrence (ARO=0.50ARO = 0.50) gives ALE=$105,000×0.50=$52,500ALE = \$105,000 \times 0.50 = \$52,500.

Step-by-Step Solution

1
Calculate the Single Loss Expectancy (SLE)
$105,000
SLE measures the dollar loss expected each time a risk event occurs by multiplying Asset Value (AVAV) by Exposure Factor (EFEF): $350,000×0.30=$105,000\$350,000 \times 0.30 = \$105,000.
2
Calculate the Annual Loss Expectancy (ALE)
$52,500
ALE represents the overall annual financial impact of the risk by multiplying Single Loss Expectancy (SLESLE) by the Annualized Rate of Occurrence (AROARO): $105,000×0.50=$52,500\$105,000 \times 0.50 = \$52,500.

Key Concept

Quantitative Risk Assessment (ALE Calculation)
Estimated Time:1m 30s
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