Advisory Policies describe the expected annual cost of a realized threat and use the formula SLE x ARO.

Advisory Policies describe the expected annual cost of a realized threat and use the formula SLE x ARO.

• A. Advisory Policies
• B. ALE
• C. ARO
• D. Asset Value

Answer: (A)

The main idea here is how to quantify an expected yearly loss from threats using a risk-metrics calculation. Single Loss Expectancy is the monetary loss you would incur from one occurrence of a threat. Annualized Rate of Occurrence is how often that threat is expected to happen in a year. Multiply those two numbers together and you get the Annualized Loss Expectancy, the amount you should expect to lose per year due to that threat. So the statement that uses the SLE × ARO formula is describing ALE, the expected annual loss, not a type of policy. Advisory Policies describe guidance or rules, not a numeric risk metric. In practice, the concept being tested—how to compute the yearly expected loss—focuses on ALE, calculated as SLE times ARO. For example, if the cost of a single incident is $50,000 and the incident is expected to occur 0.2 times per year, the ALE would be $10,000 per year.

The main idea here is how to quantify an expected yearly loss from threats using a risk-metrics calculation. Single Loss Expectancy is the monetary loss you would incur from one occurrence of a threat. Annualized Rate of Occurrence is how often that threat is expected to happen in a year. Multiply those two numbers together and you get the Annualized Loss Expectancy, the amount you should expect to lose per year due to that threat.

So the statement that uses the SLE × ARO formula is describing ALE, the expected annual loss, not a type of policy. Advisory Policies describe guidance or rules, not a numeric risk metric. In practice, the concept being tested—how to compute the yearly expected loss—focuses on ALE, calculated as SLE times ARO. For example, if the cost of a single incident is $50,000 and the incident is expected to occur 0.2 times per year, the ALE would be $10,000 per year.