What type of analysis calculates annual loss expectancy using asset value, exposure factor, and annual rate of occurrence?

The correct analysis that calculates annual loss expectancy (ALE) using asset value, exposure factor, and annual rate of occurrence is quantitative analysis. This method relies on numerical data to evaluate potential losses and provides a clear financial perspective on risk management.

In quantitative analysis, the asset value represents the worth of the asset at risk, the exposure factor reflects the percentage of loss that could occur if a specific threat materializes, and the annual rate of occurrence estimates how often that threat might happen within a year. By multiplying these factors—asset value, exposure factor, and annual rate of occurrence—managers can derive the ALE, which aids in making informed decisions about risk management strategies, allocating resources, and prioritizing risk mitigation efforts.

This numerical approach contrasts with qualitative analysis, which focuses on descriptive data and subjective assessments rather than measurable financial impacts. Gap analysis, on the other hand, looks at the difference between current performance or state and desired outcomes without specifically calculating loss expectancy. Therefore, quantitative analysis is the appropriate method for calculating ALE as it provides a structured and data-driven assessment of potential financial impacts from risks.