Assume that you are the risk manager of an organization that owns a warehouse that is valued
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Question:
Assume that you are the risk manager of an organization that owns a warehouse that is valued at $500,000. The following is the loss distribution associated with the possibility of a steamboiler explosion at your warehouse. Further assume that you think the dollar value of the maximum probable loss to a building as a result of a steam-boiler explosion is $400,000, but your assistant estimates it to be $300,000. You both agree that the maximum possible loss is the complete destruction of the building.
Dollar AmountProbability
1-9,0000.9
10,000-50,0000.06
50,001-100,0000.03
100,001-300,0000.008
300,001-400,0000.0015
400,001-500,0000.0005
1.00
What is the probability that a loss of $100,001 or greater will occur?
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