Question: An organization is evaluating potential risks in regard to the Sales Processing module of its enterprise system. The organization concludes that the Sales Processing module

An organization is evaluating potential risks in

An organization is evaluating potential risks in regard to the Sales Processing module of its enterprise system. The organization concludes that the Sales Processing module is vulnerable to a common hack in which sensitive customer information such as credit card numbers could be stolen. The estimated probability of this type of hack occurring is 10% and the cost of the hack is $5,000,000. The organization is considering three potential alternatives. First, it could decide not to implement any controls. Second, it could purchase a $200,000 insurance policy that would pay $1,500,000 in the event the organization is hacked. Third, the organization can pay FireEye (the company mentioned in the Target article in the chapter 8 notes handout) $450,000 to install its state-of-the-art anti-hacking technology, which would decrease the likelihood of the hack occurring from 10% to 3%. Using the notes example from chapter 7, draw a decision tree to depict this scenario and calculate the expected monetary value for each of the three alternatives. Discuss what you think the organization should do in terms of their potential alternatives and risk tolerance (there is not necessarily one correct answer for this question)

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