Risk Management Involves Estimating the "Expected Loss" Associated with a Particular

question 279

Essay

Risk management involves estimating the "expected loss" associated with a particular security breach. Jim Jackson is the Chief Security Officer CSO) at a global financial firm. He recently attended a cybersecurity conference where he learned about a new type of cyber-attack being used by Anonymous, a hacker group that tends to target global corporations. Based on information from various industry reports, Jim estimates the following:
Probability that Anonymous will target and attack his firm = .15
Probability that Anonymous' attack will succeed = .10
Loss that will be incurred if attack is successful = $25 million
Additional cost to defend against the attack = $300,000
Calculate the expected loss that Jim's firm faces as a result of the Anonymous threat. Show your work, including the formula you use.

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Definitions:

Social Commitment

A pledge or obligation to follow through with certain social behaviors or attitudes, often for the benefit of a group or community.

Self-Perception Theory

The theory that people sometimes infer their attitudes and attributes by observing their behavior and the situation in which it occurs.

Appearance Of Scarcity

The perception that a resource is scarce, which can increase its demand and perceived value.

Norm Of Reciprocity

An explanation for why we give help: If I help you today, you might be more likely to help me tomorrow.