Risk Management
Instruction
Calculating Risk Exposure
Risk exposure is a calculation done as part of a risk assessment. Read How to Calculate Risk Exposure Value.Using a Qualitative Risk Analysis, risk exposure is the Probability of the risk occurring multiplied by the total loss on Risk Occurrence. The risk exposure is the potential for financial loss. A quantitative risk analysis is shown in Table 1.
Table 1: Calculation of Annualized Loss Expectancy
Table 1: Calculation of Annualized Loss Expectancy
| Asset | Threat | Asset Value | EF | SLE | ARO | ALE |
|---|---|---|---|---|---|---|
| File Server | Virus every year | $15,000 | .20 | 3,000 | ½ (.5) | 1,500 |
| Operation Center | Hurricane every 10 years | $1,000,000 | .90 | 900,000 | 1/5 (.2) | 180,000 |
EF – Exposure Factor SLE – Single Loss Expectancy ARO – Annualized Rate of Occurrence ALE – Annualized Loss Expectancy
Formulas:
- SLE = Asset Value * EF
- ARO = Incidents / Year
- ALE = SLE * ARO