Joe, the system administrator, has been asked to calculate the Annual Loss Expectancy (ALE) for
a $5,000 server, which often crashes. In the past year, the server has crashed 10 times, requiring
a system reboot to recover with only 10% loss of data or function. Which of the following is the
ALE of this server?

A.
$500

B.
$5,000

C.
$25,000

D.
$50,000

Explanation:
SLE × ARO = ALE, where SLE is equal to asset value (AV) times exposure factor (EF); and ARO
is the annualized rate of occurrence.
(5000 x 10) x 0.1 = 5000