Question

Kim is the risk manager for a large organization. she is evaluating whether the organization should purchase a fire suppression system. she consulted a variety of subject matter experts and determined that there is a 1 percent chance that a fire will occur in a given year. if a fire occurred, it would likely cause $2 million in damage to the facility, which has a $10 million value. given this scenario, what is the single loss expectancy (sle)?

Answer 1

2 million dollars

SLE is Exposure Factor * asset value

Exposure factor is an estimate of the impact of the risk divided by value of asset (2mil/10 mil = .2)

.2*  10,000,000= $2,000,000