Definition
Annualized Loss Expectancy (ALE) is a metric used in risk management to estimate the potential financial loss a company might face from a specific threat over a one-year period. It is calculated by multiplying the asset's value by the exposure factor and the annual rate of occurrence. This calculation helps organizations understand the financial impact of risks, enabling them to prioritize mitigation efforts and justify security investments. For instance, if a server worth $10,000 is expected to fail once a year with a 50% impact, the ALE would be $5,000. ALE differs from Single Loss Expectancy (SLE), which measures the loss from a single occurrence of an event. This concept is frequently assessed on cybersecurity certifications like CompTIA Security+ and CISSP.