Cost Benefit Analysis (CBA)
The common approach for information security controls is economic feasibility of implementation. CBA is begun by evaluating the worth of assets which are to be protected and the loss in value if those assets are compromised. The formal manner to document this is called as cost benefit analysis or economic feasibility study. Items which impact cost of a control or safeguard include: cost of development; implementation cost; service costs; training fees; cost of maintenance.
Benefit is the value an organization realizes by using controls to avoid losses associated with vulnerability. Asset valuation is the process of assigning financial value or worth to every information asset; there are several components to asset valuation.
Once worth of various assets is anticipated, potential loss from exploitation of vulnerability is examined. Process results in approximation of potential loss per risk. Expected loss per risk stated in equation given below:
Annualized loss expectancy (ALE) equals Single loss expectancy (SLE) TIMES Annualized rate of occurrence (ARO),Here SLE is equal to asset value times exposure factor (that is EF).