1.Kimberly-Clark Company owns a warehouse worth $400,000. Ray Van Eperen. is the risk manager. Kimberly-Clark faces the risk of fire which would completely destroy their building. The probability of a fire is known to be 10%.Kimberly-Clark is considering the following risk management options to address the risk of fire to their warehouse

:

[1]Retention

[2]Full Insurance for a premium of $45,000

[3]Safety Program + Retention

[4]Safety Program + Full Insurance [premium falls to $30,000]

The cost of the Safety Program is $12,000. It has the impact of lowering the probability of a fire from 10% to 6%. However, if a fire does occur it is still a total loss.

1.) Construct a loss matrix. [4 points]