An organization estimates the cost of one loss event and how often it may occur in a year. Which calculation produces an annualized loss estimate?

### Why this is right The course formula multiplies estimated loss per event by the expected annual occurrence rate. The result is an annualized loss estimate. ### The concept Single Loss Expectancy describes one occurrence, while Annual Rate of Occurrence describes expected frequency per year. Multiplication combines these quantities into Annualized Loss Expectancy. Addition, subtraction, or reversing the ratio does not apply the stated relationship. ### The other options - **B. Annualized Loss Expectancy (ALE) = Single Loss Expectancy (SLE) + Annual Rate of Occurrence (ARO)**: adding the values does not estimate repeated annual loss. - **C. Annualized Loss Expectancy (ALE) = Annual Rate of Occurrence (ARO) ÷ Single Loss Expectancy (SLE)**: this reverses the relationship and does not produce expected loss. - **D. Annualized Loss Expectancy (ALE) = Single Loss Expectancy (SLE) − Annual Rate of Occurrence (ARO)**: subtraction is not the stated formula. ### Terms - **ALE**: Annualized Loss Expectancy. - **SLE**: Single Loss Expectancy. - **ARO**: Annual Rate of Occurrence. ### Remember For the course’s annual loss estimate, multiply SLE by ARO.