Crazy Fan Guard Company provides security services to popular live sporting event venues. Crazy Fan management has identified one of its top risks as the possibility that restrictions on premium close seating options will severely decrease its sales revenue by lessening the demand for its security services. The table below displays a description of this top risk, an inherent risk assessment, three risk response alternatives, and finally, a residual risk assessment.

Crazy Fan Guard's management accounting team estimates that the incremental cost of implementing response A is $2,200,000, and the incremental cost of implementing response B is $700,000.
Required:
1. Calculate the benefit of each risk response alternative A through C.
2. Calculate the net benefit of each risk alternative A through C.
3. Using net benefit as the criterion, explain the best risk response alternative that Crazy Fan Guard Company management should implement.

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Inherent Risk Risk Response Residual Risk Impact (on lost revenues) $10,000,000 Impact (on lost revenues) $5,000,000 Risk Likelihood 25% Likelihood 10% Alternatives Premium close scating at future popular live sporting events is discontinucd due to viewer outrage over previous violations (c.g, fans rushing court or field and making physical contact with the athletes) A-Invest in a busincss process that focuses on managing improved fan behavior at popular live sporting events B-Form an alliance with another security organization to more effectively (e.g quickly and forcfully) remove fans who rush the fild C-Take no action on-field security 15% $10,000,000 25% $10,000,000