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4- (15 pts.) A midsize corporation is considering purchase of Cyber Liability Insurance Policy. The following table provides the probability distribution of yearly cost coverage
4- (15 pts.) A midsize corporation is considering purchase of Cyber Liability Insurance Policy. The following table provides the probability distribution of yearly cost coverage associated with different level of Cyber Security IT network interruptions for this corporation. Type of Risksa Probability Cost Coverageda Noned 0.90 Minor: A: (Loss or.Damage to Electronic. 0.040 $100,000 Data) a Moderate: A +.B (Loss of Income and. 0.03p $1,000,000a Extra Expenses a Major: A+B+ C (Cyber-Extortion) 0.018a $2,500,000 Catastrophic: A+B+C+D (loss of reputation 0.002p $15,000,000 & credit monitoring of all affected) a a-- What is the expected cost of this policy for the insurance company? What is the Standard deviation of cost? Hint: Use Excel. I b--If the yearly cost of purchasing a network interruption insurance is $125,000, calculate the expected gain or loss for a corporation that purchase this insurance. Would you. recommend purchasing this insurance? Why?1 T c- Would you a buy this insurance policy at cost of $100,000? Why?T
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