Annual Loss Expectancy Calculator

Formula

The formula to calculate the Annual Loss Expectancy is:

\[ ALE = SLE \times ARO \]

Where:

$ALE$ is the Annual Loss Expectancy ($)
$SLE$ is the single loss expectancy ($)
$ARO$ is the annualized rate of occurrence

What is Annual Loss Expectancy?

Annual Loss Expectancy (ALE) is a measure used in risk management to estimate the potential annual financial loss due to a specific risk. It is calculated by multiplying the single loss expectancy (SLE) by the annualized rate of occurrence (ARO). This metric helps organizations understand the financial impact of risks and prioritize their mitigation efforts.

Example Calculation

Let's assume the following values:

Single Loss Expectancy (SLE) = $10,000
Annualized Rate of Occurrence (ARO) = 0.5

Using the formula:

\[ ALE = 10000 \times 0.5 = 5000 \text{ dollars} \]

The Annual Loss Expectancy is $5000.