Exam #2
This exam covers chapters 7 through 10 of the textbook. This is an open book exam. You need to submit an Excel spreadsheet for Question (1) and a word document with answers to questions (2) through (5).
(1) (30 points; question based on Chapter 7) Mercer paints is a small but highly regarded paint manufacturing company located in Alabama. The company has a network in place linking many of its business operations. Although the firm believes that its security is adequate, the recent addition of a web site has become an open invitation to hackers. Because of this, management requested a risk assessment. The risk assessment identified a number of potential exposures. These exposures, their associated probabilities, and average yearly losses are summarized in the following table.
Exposure Probability of Occurrence Average yearly loss for the exposure
Malware 60% $75,000
Data loss 12% $70,000
Embezzlement 3% $30,000
User errors 95% $25,000
Threats from hackers 95% $90,000
Improper use by employees 5% $5,000
Power failure 15% $300,000
In addition to the potential exposures listed, you should identify at least three other potential threats to Mercer paints (based on Chapter 7), assign probabilities, and assign average loss value (you can choose any reasonable values for probabilities and average loss). Use an excel spreadsheet to input the above data and the three other potential threats you came up with. Calculate the expected annual loss for each exposure. Calculate the expected total loss for all exposures combined. Present your findings in the form of a chart in the Excel spreadsheet. Which exposure(s) provide the highest dollar value of the loss? Summarize your finings in the exam 2 word document.
(2) (15 points; question based on Chapter 8) What is the Bullwhip effect? Why is it a problem? If you were a manager in charge of your company’s supply chain, what steps do you take to reduce the impact of bullwhip...