Please try to solve only (3)

2. Impact Assessment Consider the simplified model for risk shown in class.

Assume the following parameters 1 = .8/day , l 2 = .3 days , l 3 = 2 days , l 4 = .5 days

Assume Time intervals T2 = 1 day, T3 = 1day. Assume assets of $ 1.1 million.

a. Compute the Risk per day.

b. Modify elements you as a designer might control to adjust the risk to $ .01 Million/day

(Use the variables in Problem 2 to solve Problem 3)

3. Develop a Monte Carlo simulation of the Risk model developed in class. Assume the variables as in problem 2. Plot the model variables for increments of 10 minutes over the 24-hour day to demonstrate the successful modeling.