SLE x ARO = ALE
SLE = Single Loss Expectancy
ARO = Annualized Rate of Occurrence
ALE = Annual Loss Expectancy
Single Loss Expectancy is money, the value of assets, or what you expect to lose at the time the risk ever becomes a reality. Annualized Rate of Occurrence is the chance of the risk becoming a reality shown in a percentage. Annual Loss Expectancy is the value you measure if the risk becomes a reality in one year. The Single Loss Expectancy is calculated by using two added variables: AV x EF, which turns the above problem into:
(AV x EF) ARO = ALE.
The Asset Value is how much the asset cost the company or how much money the company is expected to likely to lose if this asset doesn’t work or needs to be repaired. Exposure Factor is how long the asset doesn’t work or how much time must be spent to repair the issue.