Annualized Loss Expectancy is calculated as Single Loss Expectancy multiplied by Annual Rate of Occurrence, or _____ = SLE × ARO.

### Why this is right The formula multiplies the expected loss from one event by the expected frequency of that event per year. This gives an estimated annual loss. ### The concept Single Loss Expectancy estimates the loss from one occurrence. Annual Rate of Occurrence estimates how often the event occurs in a year. Multiplying them gives Annualized Loss Expectancy, a yearly estimate that can help compare risk with the cost of a control. The calculation depends on the quality of the underlying estimates. ### Terms - **ALE**: Annualized Loss Expectancy, the estimated loss per year. - **SLE**: Single Loss Expectancy, the estimated loss from one occurrence. - **ARO**: Annual Rate of Occurrence, the estimated number or rate of occurrences per year. ### Remember Annual loss equals loss per incident multiplied by annual frequency.