Risk Management

Read this page and watch the video to learn more about the purpose of risk management and the four stages of the risk management process. Before you move on, make sure you have a good understanding of the formulas, and that you are able to use the formulas on this page to calculate single loss expectancy (SLE), annual rate of occurrence (ARO), and annual loss expectancy (ALE).

Instruction

Asset Valuation Example Review

To conduct an asset valuation, answer the following questions:

  • How can the level of impact be measured?

  • What are the cost implications to the business?

  • How can you determine what effect this event has on sales, IT, customer reputation, and employees?

  • What possible regulatory issues does the company face?

  • What is the best response to handle this situation in the future?

Quantitative Risk Analysis


This type of risk analysis assigns independent, objective, numeric monetary values to the elements of risk assessment and the assessment of potential losses.

EVERYTHING gets a dollar value!

Standardized calculation of risk is based on the impact of each occurrence and frequency of occurrence. The overall approach to quantitative risk analysis is illustrated in Figure 8.

Figure 8 – Quantitative risk analysis approach