Perform a threshold analysis, economics, Microeconomics

Assignment Help:
You are a member of a problem solving group that is concerned with incidents involving losses with their information system (IS). Let us assume that IS loss events can be grouped into two types, low severity IS loss (LS) and high severity IS loss (HS). Your group is focused on preventing HS incidents and you are trying to decide whether you should spend the money to install a protection system designed to reduce the likelihood of high severity IS losses; the protection system involves an elaborate system for backing up current systems and the detail specifics are not important for this analysis. The group has never had a HS IS loss but a group member was able to access a national incident database, which indicates, that from a population of 1,000 academic institutions, there were a total of 10 HS IS losses reported over the last 10 years. The database shows that only 2 of the 10 HS losses occurred in academic institutions with a protection system; the remaining 8 had no protection system. After some discussion the group decided that the risk of a HS loss is probably similar to the institutions that reported into the national incident database.

Assume that the annual cost of a protection system is $20,000 in total and the average loss from a high severity IS loss is $2 million per incident. Assume that expected cost is your evaluation performance measure.

Q: Despite the above information that I’ve provided, in order to do a proper cost/benefit analysis, you still need information on the % of academic institutions which have protection. Please perform a threshold analysis on this parameter and for each side of the threshold value indicate your preferred action (i.e. spend the $ on protection or not).

Related Discussions:- Perform a threshold analysis, economics

How have falling commodity prices affected many countries, How have falling...

How have falling commodity prices affected many developing countries? Definition of commodities; raw material like copper, iron and bauxite; and agricultural goods like rice an

Due diligence, Due Diligence The investigative procedure an investor s...

Due Diligence The investigative procedure an investor should conduct into the operations and business strategy assumptions of an organization soliciting investors.

Exchange, China had to convert its yuan into dollars. Does that cause the ...

China had to convert its yuan into dollars. Does that cause the dollar to appreciate or depreciate?

Cost, explain the traditional theory of cost with suitable diagrams.explain...

explain the traditional theory of cost with suitable diagrams.explain why LAC curve is not U shaped?

Define the adoption of economic institutional arrangement, Define the adopt...

Define the adoption of economic institutional arrangement in analytical frameworks. Adoption of Economic Institutional Arrangement: The third step for studying an economi

What is exchange rate, Q. What is Exchange Rate? Exchange Rate: The ‘pr...

Q. What is Exchange Rate? Exchange Rate: The ‘price' at which currency of one country can be converted into the currency of another country. A country's currency is ‘strong,'or

Determination of fixed exchange rate, DETERMINATION OF FIXED EXCHANGE RATE:...

DETERMINATION OF FIXED EXCHANGE RATE: In the flexible exchange rate regime, exchange rates are highly volatile which leads to uncertainties in the international payments/trans

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd