SRA-111 -- Spring, 2010 -- Class Meeting Outline
February 24, 2010
Where should you be?
Risk Analysis - 2
This is called the Annualized Loss Expectancy
Following is the formula for ALE:
ALE = (SLE) * AROA simple example:
a major flood attack occurs once every five years on average
The ARO is 0.2 (0.2 times per year)
The ALE is $8,000!
The Cost Benefit Analysis Formula:
CBA determines whether or not the control alternative being evaluated is worth the associated cost. CBA is calculated using the ALE CBA = ALE(prior) – ALE(post) – ACS ALE(prior) is the annualized loss expectancy of the risk before the implementation of the control. ALE(post) is the ALE examined after the control has been in place for a period of time. ACS is the annual cost of the safeguard.A simple example:
Landscaping outside the Data Center will reduce the occurance of a major flood event to once every 10 years
The landscaping costs $10,000 (but protects for 10 years!)
Is it worth it?
ALE (post) = $4,000
CBA = $8,000 - $4,000 - $1,000
CBA = $3,000
Now for an exercise:
This page is maintained and made available for educational use by Dr. Gerry Santoro,firstname.lastname@example.org