Case Studies with Questions and Answers
Chapter 03: Risk Measurement
As the corporate security manager, you decide to hold a staff meeting and explain to your staff that you want to develop a risk management program, which will include estimating the potential for the loss of assets. You explain to the staff that in the risk management program the probability of adverse impact to corporate assets can be viewed by looking at the cost valuation (impact) of the assets and the potential or estimated frequency of occurrence of an adverse event. You explain to them that the annual loss expectancy (ALE) is the product of impact and frequency. When using the values of f and i, you can compute the annual loss expectancy of an asset. The formula you can use is: ALE= 10(f+i-3)/3. Your staff looks at you bewildered. So, you decided to explain the formula and how to use it: