Which equation correctly expresses the Risk Scoring formula?

• A. SLE × ARO = ALE
• B. ALE × ARO = SLE
• C. ALE × ARO = Compliance Score
• D. Impact × Urgency = ALE

Answer: (A)

In risk scoring, you quantify the expected annual financial impact by combining how bad a single event could be with how often events may occur. SLE represents the loss from one incident, and ARO represents how many such incidents are expected per year. Multiplying these two gives the annualized loss expectancy (ALE), the standard measure of expected yearly loss used to prioritize risk treatments. Therefore, ALE = SLE × ARO is the correct relationship.

The other options mix the variables incorrectly or introduce metrics (like a Compliance Score or using Impact and Urgency directly) that aren’t used in this standard ALE formula.