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Twenty-five thousand messages arrive at an organization each year. Currently, there areno firewalls. On average, 1.2 successful hackings occur each year. Each successful hackattack results in a loss of about $130,000 to the company. A major firewall is proposed at acost of $66,000 and a maintenance cost of $5,000. The estimated useful life is 3 years. Thechance that an intruder will break through the firewall is 0.0002. In such a case, thedamage will be $100,000 (30%), or $200,000 (50%), or no damage. There is an annualmaintenance cost of $20,000 for the firewall. What is the risk assessment and should management buy the firewall?

Operation Management, Management Studies

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