Consider the Disaster Risk Decision Tree Model

question 93

Essay

Consider the disaster risk decision tree model.
(a) Derive a formula to represent the amount that the probability of all suppliers being disrupted simultaneously, P(n), will increase if the super-event probability S is doubled.
(b) Test your formula by computing the amount of increase if the original S equals 2% and there are two suppliers, each with U = 5%.

---

Definitions:

Translation Statement

A financial statement that converts the figures from a foreign subsidiary's local currency into the parent company's reporting currency.

Issued Capital

Issued capital refers to the total value of a company's shares that have been issued to shareholders. This capital is a portion of the authorized share capital that the company has decided to sell.

Foreign Currency Transaction

A business deal or operation that involves the exchange of currencies from two different countries.

Australian Dollars

The official currency of Australia, symbolized as AUD.