A security analyst has determined that a security breach would have a financial impact of $15,000 and is expected to occur twice within a three-year period. Which of the following is the ALE for this risk?
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Correct answer: $10,000.
Why this is the answer
The Annualized Loss Expectancy (ALE) is calculated by multiplying the Single Loss Expectancy (SLE) by the Annualized Rate of Occurrence (ARO). In this scenario, the financial impact of a single breach (SLE) is $15,000. The breach is expected to occur twice within a three-year period, meaning the ARO is 2/3 or approximately 0.6667 per year. Therefore, ALE = SLE ARO = $15,000 (2/3) = $10,000. $7,500 would be the ALE if the breach occurred once every two years. $15,000 is the SLE, not the ALE. $30,000 would be the ALE if the breach occurred twice every year.
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