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Risk Analysis Explained: SLE, ARO and ALE with a Worked Example
Security & Risk ManagementCISSPSecurity+
How much could one threat cost you each year, and how much should you spend to stop it? In this video, I'll walk through quantitative risk analysis with one worked example, an office fire: asset value, exposure factor, single loss expectancy, annual rate of occurrence and annualized loss expectancy, then how to decide whether a safeguard is worth its cost.
What you will learn
- What quantitative risk analysis is
- The worked example: an $800,000 office and a fire once in ten years
- AV, EF and SLE: SLE = AV × EF
- ARO and ALE: ALE = SLE × ARO
- Safeguard value = (ALE before − ALE after) − ACS, with a positive and a negative example
- Qualitative, semi-quantitative and quantitative analysis, and the limits of ALE
- Three tip ideas: ACS ≠ purchase price; ALE ≠ forecast; money ≠ only test