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Analysis of the Quantitative Approach to Risk (Essay Sample)


Threat motivation, threat capabilities, ease of exploitation, and existing countermeasures are all considerations in determining the likelihood of a threat occurrence. Determining a numerical value to assess the likelihood of a threat happening is difficult. One of the primary approaches to risk calculation is the quantitative approach. The formulas and metrics used in the calculation of risk analysis using quantitative analysis involve single loss expectancy (SLE), annualized rate of occurrence (ARO), annualized loss expectancy (ALE), total cost of ownership (TCO), return on investment (ROI), and cost/benefit analysis (CBA).

Using an organization with which you are familiar and including real-world examples for that organization, prepare a short paper that explains the relationship between SLE, ARO, and ALE in determining risk and the impact these items will have on your organization. Structure your response as a professional position paper and NOT a scholarly or academic paper. Avoid explaining academic or theoretical concepts without relating them specifically to your organization and how they impact your organization.

Length: 1-2 pages not including titles and reference pages.

References: Support your paper with a minimum of 4 scholarly resources

Your paper should demonstrate thoughtful consideration of the ideas and concepts presented in the course and provide new thoughts and insights relating directly to this topic. Your response should reflect scholarly writing and current APA standards. Be sure to adhere to Northcentral University's Academic Integrity Policy.


Quantitative Approach to Risk
Quantitative Approach to Risk
No business is immune to the probability of a risk occurring. According to Holton (2004), a risk is the probability that a certain unfavorable event will take place. When this event takes place, it may cause serious damages to an organization. Different risks vary in severity. In determining the severity of a risk, its likelihood of occurrence and the magnitude of data that it is likely to cause is normally taken into consideration. When analyzing risks using quantitative analysis, single loss expectancy (SLE), annual rate of occurrence (ARO), and annualized loss expectancy is taken into consideration.
Single loss expectancy (SLE) is the most likely that might result from a security risks occurring and is normally given by the value of the asset (VA) that faces the risk multiplied by exposure factor (EF) (Bella et al., 2007). In the example below:

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