A large information technology (IT) company sells a software product designed to help protect an organization’s data. The company’s market research has determined that hospitals and other medical organizations in its market area have a 1.3 percent chance of losing some of a patient’s data over a five-year period. With the IT company’s software, the chances of patient data loss for a five-year period are reduced to 0.12 percent.
Further, the market research has determined that, when patient data loss occurs, there is a 15 percent chance that the organization will lose the patient’s business and a 0.75 percent chance that a lawsuit will result. The average cost of losing a patient’s business is $600 in promotion expenses and other start-up costs to acquire a new patient. The average cost of a lawsuit is $100,000.