lets say for example you are working on Risk Assessment for your company's technology assets. What formula do you use to calculate how much it would cost per year if you had to replace or repair an asset?

Here is the Formula:


Risk assessment is what involves reviewing your assets, then determining how often they might be at risk.

Step 1: Determine the likelihood of a risk occurring in an annual basis, this is called the Annualized Rate of Occurrence(ARO)

Step 2: Determine what would be cost for replacing the asset if it were lost or for repairing the damages. The dollar value, which would also includes lost sales and other costs, is called the Single Loss Expectancy (SLE)

You use the ARO Times SLE to calculate the Annual Loss Expectancy (ALE) you can use this formula:

web server might be at risk 4 times a year ........... ARO = 4
The Cost to replace/repair it would be $5,000 .... SLE = $5,000
4 X 5000 = 20,000 ................................ ALE = $20,000

Again the formula is:

its very easy to calculate