The Single Loss Expectancy is $1,000,000 and the Annual Rate of Occurrence is 20%. What is the Annualized Loss Expectancy?

To calculate the Annualized Loss Expectancy (ALE), you can use the formula:

Annualized Loss Expectancy = Single Loss Expectancy × Annual Rate of Occurrence

In this scenario, the Single Loss Expectancy (SLE) is $1,000,000, and the Annual Rate of Occurrence (ARO) is 20%, or 0.20 when expressed as a decimal.

Using the formula:

ALE = SLE × ARO

ALE = $1,000,000 × 0.20

ALE = $200,000

Thus, the Annualized Loss Expectancy, which reflects the expected annual losses due to a specific risk, is calculated to be $200,000. This figure helps organizations determine the financial impact of potential risks and aids in prioritizing risk management efforts effectively.