Problem
I. Identify 2 types of financial loss from a crisis event. (Note that a financial loss is not the same as a crisis in a financial market.) provide an example of each type of loss. Which one of your examples is the most difficult to quantify? Why?
II. Why is "worst case scenario" analysis difficult to perform? Give one example of a worst case scenario and the outcome expected.
III. When performing a risk analysis, we may be faced with a choice of using one of two formulas to calculate a risk measure:
i. Probability x impact = RM
or
ii. probability X (impact)2 RM
If you have greater confidence in your estimates for impact than you do for your estimates of probability, which formula are you more likely to use? Why?
IV. Would a manufacturing business be likely to use an alternate site strategy to address a threat which would cause the business to close for no more than 2 days (e.g. an ice storm)? Why or why not?