The Espy Company recently had an outside consulting rm perform an audit of its information systems department.

The Espy Company recently had an outside consulting firm perform an audit of its information systems department. One of the consultants identified some business risks and their probability of occurrence. Estimates of the potential losses and estimated control costs are given in Figure 15-10.

a. Using the Figure 15-10 information, develop a risk assessment for the Espy Company.

b. If you were the manager responsible for the Espy Company€™s information processing system, which controls would you implement and why?

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Losses ($) High Estimate Probability That Loss Will Occur 0.08 0.10 0.65 0.05 0.40 0.40 0.15 0.10 Low Estimated Control Costs ($) 2,000 1,400 8,000 1,000 Hazard Estimate 50,000 4,000 1,000 3,000 850 850 250,000 150,000 Equipment failure Software failure Vandalism 150,000 18,000 15,000 9,000 2,000 2,000 500,000 300,000 bezzlement Brownout 250 ower surge Flood Fire 300 2,500 4,000 FIGURE 15-10 A risk analysis for the Espy Company.