Annualized Rate of Occurrence, also known as ARO, refers to the expected frequency with which a risk or a threat is expected to occur. ARO is also commonly referred to as Probability Determination.
Calculating the Annualized Rate of Occurrence is reasonably straightforward in theory but can become far more complicated in practice. If you’re hoping to tackle a problem from a methodical and mathematical point-of-view, you can simply apply the formula.. However, the complications arise when considering all the factors that can actually influence the probability of something happening. As the number of variables increases, so too does the complexity of the ARO calculation.
Before dealing with the most complicated of cases, understanding the underlying formula for calculating the Annualized Rate of Occurrence is of the utmost importance.
Calculating ARO
To accurately come up with an ARO figure, you’ll need to have a figure for the predicted number of occurrences of an incident and the number of years in question. Divide the first figure by the second figure, and you’ll be left with your ARO. Essentially, Annual Rate of Occurrence is a ratio of incidents to years.
NUMBER OF INCIDENTS / NUMBER OF YEARS = ANNUAL RATE OF OCCURRENCE
Example 1:
If you’re trying to calculate the ARO for house break-ins in your neighborhood, you’ll need to know the number of predicted break-ins that will occur within a specific period of time. That is, if it’s predicted that there will be 25 break ins within a 5-year period, your calculation would go like this:
25 / 5 = 5
Therefore, your Annual Rate of Occurrence is 5.
Example 2:
Perhaps your car seems to keep breaking down and you’re trying to make an informed decision as to whether you should continue repairing it or cut your losses, get rid of it, and buy a replacement. Working out the ARO of your car breaking down may help you paint a clearer picture of this situation.
To do this, you’ll need to come up with a predicted number of times that the car will break down over a specified number of years. This may be calculated by means of previous occurrences, and so on. For instance, if you calculate that the car is predicted to break down 16 times in the next 4 years, the calculation would be as follows:
16 / 4 = 4
Therefore, the Annualized Rate of Occurrence of your car breaking down is 4.
More Complex Instances of Calculating ARO
As previously mentioned, the general formula for and logic behind calculating Annualized Rate of Occurrence is pretty straightforward, but does get more complicated when the two figures in question aren’t completely clear. It’s easy to work out the ARO when you’re completely sure about the number of years in question and the number of predicted occurrences of the incident, but sometimes working out the latter requires a lot more work.
Predicting the frequency of an event occurring before it has happened is all about probability, and it’s a bit of a guessing game. Making a prediction like this is all about looking back at past occurrences as well as considering other relevant factors that may influence the event happening or not happening in the same way in the future.
For instance, in the case of the first example – calculating the Annualized Rate of Occurrence for break-ins in a neighborhood – there are several variables that you’d need to consider before you could come up with a fair ARO. These may include:
- Break-in statistics for the area over previous years.
- Changes in break-in statistics from year to year.
- Any changes in the security presence within the area.
- Any significant security upgrades in the neighborhood.
- A comparison between occurrences of break-ins versus those that are reported.
- The predicted fluctuations in the housing market in the area – that is, possible increases or decreases in property value.
Likewise, the second example would also involve a long list of variables affecting the predicted number of occurrences of your breaking down before you could calculate the ARO. These may include:
- The number of times the car has broken down in previous years.
- How often the car has been serviced.
- The opinion of your mechanic.
- How old your car is.
- How old your car was when you got it.
- How often you drive your car.
Clearly, all these variables would need to be factored into your calculations, and some are harder than others to quantify, thus making the overall calculation of Annualized Rate of Occurrence difficult to work out.
As much as we’d like the figure produced by ARO calculations to be accurate, predictions for the future are always estimations. They involve expectations and guesswork, and although that ought not to take away from the validity of the figure produced, it certainly ought to be considered.
ARO: Cybersecurity Relevance
The concept of ARO in general risk assessment may be clear, however its relevance in the world of cybersecurity may be less obvious. ARO can be used to consider the possibility of cyber-threatsby producing these estimated figures. This would allow experts in the field to make decisions based on how risky something may be as a higher Annualized Rate of Occurrence means a hgiher risk to the network’s safety.
Of course, as previously mentioned, ARO figures are not an exact science but they are helpful in dealing with and preventing potential threats. Having a wider understanding of how likely a risk incident is can influence decisions about what kind of cybersecurity measures to implement and develop in the future.
Final Thoughts on Annualized Rate of Occurrence
So what is ARO? Well, ARO is a figure that indicates the potential likelihood of a risky event happening, based on past occurrences, statistics, and a whole range of additional variables.
Knowing and understanding ARO in the world of cybersecurity can help experts prepare for threats as best as possible and defend themselves with at least a little bit of warning. Although Annualized Rate of Occurrence figures involve many variables and a lot of guesswork, it still provides valuable information that can lead to real-life advantages.
The best way to assess the threats your company may face is to conduct a security assessment that can consider all relevant factors and do the work for you. Contact Sangfor today to find out more about your cybersecurity options.
