# What is annual loss expectancy?

#### Understand the Problem

The question is asking for an explanation of the concept of annual loss expectancy, which is a risk management metric used to quantify the expected loss due to a specific risk over a year.

Annual Loss Expectancy (ALE) is the expected monetary loss from a risk over one year.

Annual Loss Expectancy (ALE) is a calculation used in risk management to determine the expected monetary loss for an asset due to a risk over a one-year period.

Annual Loss Expectancy (ALE) is a calculation used in risk management to determine the expected monetary loss for an asset due to a risk over a one-year period.

ALE is calculated using the formula: ALE = Single Loss Expectancy (SLE) x Annual Rate of Occurrence (ARO), where SLE is the monetary value of a single loss and ARO is the expected frequency of the risk occurring in a year.

#### Tips

One common mistake is confusing ALE with SLE. Ensure you understand that ALE projects annual loss due to risk occurrence frequency.

#### Sources

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