A team conducting a risk analysis is having difficulty
projecting the financial losses that could result from a
risk. To evaluate the potential losses the team should:
A. compute the amortization of the related assets.
B. calculate a return on investment (ROI).
C. apply a qualitative approach.
D. spend the time needed to define exactly the loss amount.
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Answer Posted / guest
Answer: C
The common practice, when it is difficult to calculate the
financial losses, is to take a qualitative approach, in
which the manager affected by the risk defines the financial
loss in terms of a weighted factor (e.g., 1 is a very low
impact to the business and 5 is a very high impact). A ROI
is computed when there is a predictable savings or revenues,
which can be compared to the investment needed to realize
the revenues. Amortization is used in a profit and loss
statement, not in computing potential losses. Spending the
time needed to define exactly the total amount is normally a
wrong approach. If it has been difficult to estimate
potential losses (e.g., losses derived from erosion of
public image due to a hack attack) that situation is not
likely to change, and at the end of the day, you will arrive
with a not well-supported evaluation.
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