Using Net Benefit to Evaluate Risk Response Alternatives Cooper Movie Studio Corp, makes movies and is interested in lowering its operating costs for the following year, while maintaining the high quality and appeal of its movies. Cooper's management is concerned about the additional costs the company would have to reur new ndustry regulation is passed by Congress. The chart at the top of the next page contains a description of this top risk, an inherent risk assessment, three risk response alternatives, and a residual risk assessment for each response alternative. Inherent Risk Risk Response Residual Risk Impact Impact (on operating on operating Likelihood costs) Risk Alternatives Likelishood costs) Poor behavior by others in the industry results in Congress passing costly new legislation that regulates the behavior of all movie 30% S80,000,000 A-Share Cooper's effective marketing processes with competitors to help mitigate poor industry behavior B-Lobby Congress on behalt of the movie industry generaly and Cooper in particular c-Take no action i, response to possible new regulation 20% sao,000.000 15% $50,000,000 30% ssoooo,000 Finally, Cooper's management accountants estimate that the incremental cost of implementing risk response A is $3,000,000 and the incremental cost of implementing risk response B is $13,000,000. Required: If an amount is zero, leave it blank or enter "0" 1. Calculate the inherent risk for Cooper 24,000,000 Check My Work Previous Save and Exit Submit Assignment for Grading e ns d) PrtScn Home End #6 ER accountants estimate that the incremental cost of implementing risk response A is $3,000,000 and the incremental cost of implementing risk response B is $13,000,000. If an amount is zero, leave it blank or enter 1. Calculate the inherent risk for Cooper 24,000,000 2. Calculate the residual risk for Cooper associated with each of the three risk response atermatives A, B, and C A 16,000,000 7,500,000 24,000,000 C. 3. Calculate the benefit for Cooper associated with each of the three risk response alternatives A, B, and C B. 4. Caloulate the net benefit for Cooper associated with each of the three risk response alternatives A, B, and C C. 5. Using net benefit as the criterion, which risk response should Cooper choose to implement? The risk response alternative with the greatest net benefit is alternative AV KPr Previous Save and Exit Submit Assignment for Grading Fs 6 Calculate the net benefit for Cooper associated witf jeach of the three risk response alternatives A, B, and C Using net benefit as the criterion, which risk response should Cooper choose to implement? he risk response alternative with the greatest net benefit is alternative A Cheok My Won 1. Inherent risk-(Likelihood) x (impact) 2. For Residual risk, the likelihood and impact are assessed AFTER considering the effects of a particular response alternative Residual risk (Likelihood) x (Impact) 3. Benefit Inherent risk Residual risik 4. Net benefit Response benefit -Response cost Review the "How to Use Net Benefit to Evaluate Risk Response Alternatives" example in your text KPr Check My Work Save and Exit Submit for Grading FS 6 8 9