Question

Jack is conducting a risk assessment for his firm and is evaluating the risks associated with a flood inundating the firm’s data center. Consulting FEMA maps, he determines that the data center is located in a 100-year flood plain. He estimates that a flood would cause $5M of damage to his $40M facility. What is the annualized loss expectancy? Group of answer choices $5,000,000 $500,000,000 $50,000 $500,000

Answer 1

Answer: $500,000

Step-by-step explanation:

Firstly, we should note that the annualized loss expectancy will be 10% of the estimated damage.

Since we are informed that Jack estimated that a flood would cause $5M of damage to his $40M facility, then the annualized loss expectancy will be:

= 10% × $5 million

= $500,000