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Problem 1: A widget manufacturer has installed new network servers, changing its network from a peer-to-peer network to a client/server-based network. The network comprises 200 users who make an average of $20 an hour, working on 100 workstations. Formerly, none of workstations involved in the network had anti-virus software installed on machines. This was because there was no connection to Internet, and the workstations didn’t have floppy disk drives or Internet connectivity, so the risk of viruses was deemed minimal. One of the new servers offers a broadband connection to the Internet, which employees can now use to send and receive email, and surf the Internet. One of the managers read in a trade magazine that other widget companies have reported the 80 percent chance of viruses infecting their network after installing T1 lines and other techniques of Internet connectivity, and that it might take upwards of three hours to restore data that’s been damaged or destroyed. A vendor will sell licensed copies of anti-virus software for all servers and the 100 workstations at a cost of $4,700 per year. The company has asked you to verify the annual loss that can be expected from viruses, and find out if it is beneficial in terms of cost to purchase licensed copies of anti-virus software.

problem1. What is the Annualized Rate of Occurrence (ARO) for this risk?

problem2. Evaluate the Single Loss Expectancy (SLE) for this risk?

problem3. Using the formula ARO x SLE = ALE, find out the Annual Loss Expectancy?

problem4. Determine whether it is beneficial in terms of monetary value to purchase the anti-virus software by computing how much money would be saved or lost by purchasing the software?

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