Q3 : Suppose that an attack would do $200,000 in damage and has a 25% annual pro
ID: 3799509 • Letter: Q
Question
Q3: Suppose that an attack would do $200,000 in damage and has a 25% annual probability of success. Spending $15,000 per year on Countermeasure A would reduce the damage of a successful attack by 50%. a) Do a risk analysis comparing benefits and costs. Show your work clearly. Explain whether or not the company should spend the money. b) Do another risk analysis if Countermeasure B costs $25,000 per year but would cut the annual probability of a successful attack by 40%. Again, show your work. Explain whether or not the company should spend the money.
Explanation / Answer
Suppose that Associate in Nursing attack would do $200,000 in injury and incorporates a twenty fifth annual likelihood of success.
Spending $15,000 each year on step A would scale back the injury of a winning attack by five hundredth.
a) Do a risk analysis scrutiny edges and prices. Show your work clearly.
Explain whether or not or not the corporate ought to pay the cash.
Given, attack cost: $200,000 damage.
25% annual likelihood of success.
So, the injury value on Associate in Nursing annual average are going to be $50,000.
So, disbursement $15000 each year would scale back the injury of a winning attack by five hundredth
So, if we have a tendency to pay $15000, the injury value on Associate in Nursing annual average are going to be $25,000.
Or, in alternative words, disbursement $15000 would prevent $25000 once a year.
Therefore, the profit is: $25000 - $15000 = $10000 p.a. and also the company disbursement the quantity
will be profitable.
b) Do another risk analysis if step B prices $25,000 each year however would cut the
annual likelihood of a winning attack by four-hundredth. Again, show your work.
Explain whether or not or not the corporate ought to pay the cash.
As mentioned earlier, the the injury value on Associate in Nursing annual average are going to be $50,000.
Spending $25000 each year would cut the annual likelihood of a winning attack by four-hundredth.
So, if $25000 spent each year, the attack likelihood are going to be reduced from twenty fifth to fifteen.
So, the injury value on Associate in Nursing annual average are going to be $30,000.
So, disbursement $25000 each year would scale back the injury value from $50000 to $30000.
Therefore, the profit is: $20000 - $25000 = $-5000 which suggests a loss. And is thus,
no best to travel with this step.
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