Question

1. Suppose a department has determined that some users have gained unauthorized access to the computing system. Managers fear the intruders might intercept or even modify sensitive data on the system. Cost to reconstruct correct data is expected to be $2,000,000 with 5% likelihood per year.

One approach to addressing this problem is to install a more secure data access control problem. The cost of access control software is is $50,000 with 80% effectiveness. Here is the summary of risk and control:

• Cost to reconstruct correct data = $2,000,000 with 5% likelihood per year
• Effectiveness of access control software: 80%
• Cost of access control software: $50,000

Determine the expected annual costs due to loss and controls. Also, determine whether the costs outweigh the benefits of preventing or mitigating the risks. (5 points)

Answer 1

ANSWER:

From the question we have

Cost to reconstruct correct data = $2,000,000 with 5% likelihood per year

The cost of access control software is $50,000 with 80% effectiveness.

Cost to reconstruct correct data = $2,000,000 with 5% likelihood per year

Hence, 5% of $ 2,000,000 = $100,000

The amount taken to reconstruct correct data = $2,000,000 - $100,000

Hence to reconstruct correct data it takes amount = $1,900,000 is expected.

From the question we know that amount taken to install access control software= $50,000

From the question we know the effectiveness is = 80% of software cost

= 80/100 * 50,000

= $40,000

Hence to reconstruct by using the access control software it will cost = $50,000 + $40,000

= $90,000 is expected.

Hence $90,000 is expected annual cost to reconstruct by using access control software.

Now we calculate the saving

We know that savings = Annual cost to reconstruct correct data - Annual cost to reconstruct correct data using access control software

Saving = $1,900,000 - $90,000 = $1,810,000

Hence the amount saved by using access control software is $1,810,000

NOTE:-- Please comment if you face any difficulty in understanding the solution. Please Please Upvote. Thank you.