Which one of the following represents an ALE calculation? 

Answer options:

A. single loss expectancy x annualized rate of occurrence.
B. gross loss expectancy x loss frequency.
C. actual replacement cost - proceeds of salvage.
D. asset value x loss expectancy.

A

Single Loss Expectancy (SLE) is the dollar amount that would be lost if there was a loss of an asset. Annualized Rate of Occurrence (ARO) is an estimated possibility of a threat to an asset taking place in one year (for example if there is a change of a flood occuring once in 10 years the ARO would be .1, and if there was a chance of a flood occuring once in 100 years then the ARO would be .01). The following answers are incorrect: gross loss expectancy x loss frequency. Is incorrect because this is a distractor. actual replacement cost - proceeds of salvage. Is incorrect because this is a distractor. asset value x loss expectancy. Is incorrect because this is a distractor.