Exposure Factor (EF) in risk management represents:

• A. The probability of an event.
• B. The total asset value.
• C. The percentage of asset loss that would occur if a specific risk event were to happen.
• D. The time to recover.

Answer: (C)

Exposure Factor is the portion of an asset’s value that would be lost if a specific risk event occurs. It represents the impact of the event on that asset, expressed as a percentage (or decimal). This value is used with the asset’s value to calculate the potential loss from a single event: Single Loss Expectancy = Asset Value × Exposure Factor. For example, if an asset worth $100,000 could suffer a loss of 40% in a given incident, the Exposure Factor is 0.4 and the Single Loss Expectancy would be $40,000. This concept is distinct from the probability of the event (likelihood) and from metrics like total asset value or recovery time.