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Annualised Loss Expectancy Calculator

Work out annualised loss expectancy instantly with clear inputs, formula shown and shareable results.

About Annualised Loss Expectancy Calculator

Quantitative risk analysis multiplies asset value by exposure factor to get the single loss expectancy, then by the annual rate of occurrence to get the annualised loss expectancy. ALE is directly comparable with the annual cost of a control, which is what makes the method useful for budget arguments: a control costing more than the ALE it removes is not worth buying on risk grounds alone.

Formula

ALE

SLE = asset value x exposure factor; ALE = SLE x ARO; control is justified when ALE > annual control cost

Worked example

With the default values below, Annualised Loss Expectancy Calculator returns Annualised loss expectancy of $280,000.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Asset valueminimum 0
2,000,000
Exposure factoraccepts 0–100 %
35 %
Annual rate of occurrenceaccepts 0–365
0.4
Annual cost of the proposed controlminimum 0
120,000

Results

Annualised loss expectancy
$280,000.00
Single loss expectancy
$700,000.00
Is the control economically justified
Yes - expected annual loss exceeds the control cost
Net annual benefit of the control
$160,000.00

Step by step

  1. 1Values used
  2. 2ALE
  3. 3Annualised loss expectancy= 280,000.00
  4. 4Single loss expectancy= 700,000.00
  5. 5Is the control economically justified= Yes - expected annual loss exceeds the control cost
  6. 6Net annual benefit of the control= 160,000.00

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation or tax into account.
  • Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

Where does the annual rate of occurrence come from?

Incident history, industry breach data and threat intelligence. It is the weakest input in the model, so run the calculation across a range rather than a single point estimate.

Does a control ever justify itself despite failing this test?

Yes — regulatory mandates, contractual obligations and controls that reduce several risks at once. ALE informs the decision rather than making it.

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