Fundamental theorem of linear programming

2013-04-05T07:09:15Z

98.223.70.143: /* Proof */

{{unreferenced|date=January 2010}}

The '''annualized loss expectancy''' (ALE) is the product of the [[annual rate of occurrence]] (ARO) and the [[single loss expectancy]] (SLE). It is mathematically expressed as:

:<math> {ALE} = {ARO} \times {SLE}</math>

Suppose than an asset is valued at $100,000, and the [[Exposure Factor]] (EF) for this asset is 25%. The [[single loss expectancy]] (SLE) then, is 25% * $100,000, or $25,000.

The annualized loss expectancy is the product of the [[annual rate of occurrence]] (ARO) and the [[single loss expectancy]].
ALE = ARO * SLE

For an annual rate of occurrence of one, the annualized loss expectancy is 1 * $25,000, or $25,000.

For an ARO of three, the equation is:
ALE = 3 * $25,000

Therefore:
ALE = $75,000

==See also==
* [[Single loss expectancy]]

[[Category:Financial risk]]

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Fundamental theorem of linear programming