Using Net Benefit to Evaluate Risk Response Alternatives Alejandro's Moab Grill features authentic Mexican dishes delivered in a relaxing Western motif. Given the short summer tourist season, Alejandro (the owner) decided to identify his top risk. Alejandro is most concerned that his restaurant will go relatively unnoticed by tourists as the number of other local competing restaurants continues to increase. As a result, he worries about the risk that the restaurant attracts fewer diners, thereby causing a decrease in sales revenue. The chart below contains a description of this top risk, an inherent risk assessment, three risk response alternatives (A through C), and a residual risk assessment for each response alternative. Risk Inherent Risk Residual Risk Impact (On Lost Revenues) Impact (On Lost Revenues) Likelihood Risk Response Alternatives Likelihood Fewer tourists A-Switch the advertising campaign to more directly target tourists. 40% $2,000,000 choose to dine at Alejandro's, thereby causing the restaurant 60% $3,000,000 B--Redesign the restaurant's exterior appearance to increase its curb appeal to tourists. 30% $1,000,000 to lose considerable C-Take no action in response to possibility of insufficient tourist diners. 60% $3,000,000 sales revenue. Finally, Alejandro estimates that the cost of implementing risk response A is $100,000 and the cost of implementing risk response B is $1,000,000. Required: 1. Calculate the inherent risk for Alejandro. 2. Calculate the residual risk for Alejandro associated with each of the three risk response alternatives A, B, and C. Alternative A Alternative B Alternative C Residual Risk 3. Calculate the benefit for Alejandro associated with each of the three risk response alternatives A, B, and C. If an amount is zero, enter "0". Alternative A Alternative B Alternative C Benefit 4. Calculate the net benefit Alejandro associated with each of the three risk response alternatives A, B, and C. If an amount is zero, enter "O". Alternative A Alternative B Alternative C Net Benefit 5. Using net benefit as the criterion, which risk response should Alejandro choose to implement