what will be the Annual Loss Expectancy (ALE) of the project?

You are the project manager of the NHQ project in Bluewell Inc. The project has an asset valued
at $200,000 and is subjected to an exposure factor of 45 percent. If the annual rate of occurrence
of loss in this project is once a month, then what will be the Annual Loss Expectancy (ALE) of the
project?

A.
$ 2,160,000

B.
$ 95,000

C.
$ 108,000

D.
$ 90,000

Explanation:

The ALE of this project will be $ 108,000.
Single Loss Expectancy is a term related to Quantitative Risk Assessment. It can be defined as
the monetary value expected from the occurrence of a risk on an asset. It is mathematically
expressed as follows:
SLE = Asset value * Exposure factor
Therefore,
SLE = 200,000 * 0.45
= $ 90,000
As the loss is occurring once every month, therefore ARO is 12. Now ALE can be calculated as
follows:
ALE = SLE * ARO
= 90,000 * 12
= $ 108,000