What is the correct formula for Risk Scoring?

The correct formula for Risk Scoring is based on the components of risk management within the context of ServiceNow and general risk assessment principles. Specifically, the formula for calculating the Average Loss Expectancy (ALE) involves the Single Loss Expectancy (SLE) and the Annual Rate of Occurrence (ARO).

Single Loss Expectancy (SLE) represents the expected monetary loss every time a risk occurs, while the Annual Rate of Occurrence (ARO) quantifies the estimated frequency at which the risk is expected to occur within a year. The formula states that SLE multiplied by ARO gives the Average Loss Expectancy (ALE), which provides a quantifiable measure of potential loss from risks over time.

This relationship is essential for understanding and mitigating risks, as it helps organizations prioritize their risk management efforts based on potential financial impacts. Calculating ALE through this method enables better strategic decision-making regarding resource allocation to address vulnerabilities.

The other options do not accurately represent the foundational relationships used in risk assessment. For instance, while they involve terms relevant to risk management, they do not align logically with the conventional formulas used to compute risk or compliance scores.