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).


Annual Rate of Occurrence (ARO)

ARO is the number of times per year that an incident is likely to occur. Knowing the adversaries' intent, capability, and motivation will help determine the ARO.

          ARO = Incidents / Year

 Annualized Rate of Occurrence is number of incidents per year.

Figure 10 – Annual rate of occurrence calculation