A B D E F 1 All Costs (Ques. #1) Damages (Ques. #2) 2 Cost Description Price / Unit Units Total Loss Units Losses 3 Director of IT $ 84.13 $20.00 $ 4 Director of IT - Benefit $ 1,683.00 $ 6,731.00 20.00 $ 1,683.00 $ 5 Ten IT Employees $ 40.00 $200.00 $ 6 Ten IT Employees - Benefits 8,000.00 $ $ 32,000.00 200.00 $ 8,000.00 $ 7 Daugher Admin Leave $ 50.00 $160.00 $ 8,000.00 $ 8 Daugher Benefits $ 32,000.00 200.00 $ 10,000.00 $ 9 Daugher - Regular Severance $ 50.00 $800.00 10 Daugher - Benefits $ 40,000.00 $ $160,000.00 800.00 $ 40,000.00 $ 11 Daugher - Severance OT $ 50.00 $200.00 12 Daugher Benefits 13 IT Utilities and Ops $ 672.00 $ 20.00 14 Redundant Server 15 Software Protection 16 $ 10,000.00 $ $ 40,000.00 $ 13,440.00 $ $ 75,000.00 $100,000.00 200.00 $ 10,000.00 $ 20.00 $13,440.00 $ 75,000.00 17 18 $526,854.00 $ 100,000.00 $ 258,123.00 G H J K L 19 Question 1 Tips 20 21 . 22 . 3 23 24 25 . IT Director = $175,000 / 52 weeks / 40 hours per week * 20 hours to remediate plus benefits at 25% Ten IT Staff at $40 per hour, plus OT of $20 per hour * 20 hours to remediate, plus benefits at 25% Daughter's administrative leave at $50 * 4 weeks * 40 hours per week, plus benefits at 25% Daughter's regular hours severance at $50 * 20 weeks * 40 hours per week, plus benefits at 25% Daughter's OT severance at $75 * 20 weeks * 10 hours per week, plus benefits at 25% 26 Question 2 Tips 27 Not all cost are considered damages 28 What costs were incurred because of the cyber attack? $ 6,731.00 $32,000.00 (175000/2080)*20*4+25% (10*20)*40+25% $32,000.00 =160*50+25% $25,000.00 (800+200)*50+25% $53,760.00 =672*20+25% 29 30 A B C D E 1 2 Lost Productivity F G H J Question 3 K Question 4 L M N Lost Sales Losses Lost Profits @ 20% Normal Actual 3. 4. 1 5 12:01am Attack Productivity Productivity Lost Productivity Percent Loss in Productivity $400 /hour @ $13,441 / hour @ $269/ unit 0:01 1:00 50 50 7 8 9 234 56 1:01 2:00 50 50 2:01 3:00 50 38 3:01 4:00 50 38 4:01 5:00 50 25 5:01 6:00 50 25 10 7 6:01 7:00 50 12 1 8 7:01 8:00 50 12 12 9 8:01 9:00 50 12 13 10 9:01 10:00 50 12 4 11 10:01 11:00 50 25 15 12 11:01 12:00 50 25 16 13 12:01 1:00 50 38 17 14 1:01 2:00 50 38 18 15 2:01 3:00 50 50 19 16 3:01 4:00 50 50 20 21 Lost productivity $0 22 23 Lost sales per hour: $10,000,000 / 31 days / 24 hours/day: 24 Lost sales per unit: $10,000,000 / 37,200 units $13,441 $0 $269 $0 25 26 27 28 Question 3 Tips 29 Losses @ $400/hour = (2,400) 30 31 32 Question 4 Tips 23456 33 Damages for lost profits = $16,129 Deady Remediation Costs ? Acccccibility: Invorticate Productivity, Sales & Profits + P M Display Setti Copied! BRIEF CASES Brief cases 1-4 are based on the following information. Your client, Virus-Victim, Inc. (VVI), has suffered an attack. The company sells popular retail items only via the Internet to customers all over the world. The perpetrator has been identified and local law enforcement and the county prosecutor are handling the criminal action. VVI believes that the perpetrator has the deep pockets to compensate VVI for its losses associated with the attack. The perpetrator committed the act at 12:01 am Saturday, July 4th and the retail website was down for 8 hours. At 12:01 am, alarms triggered and the Director of Information Technology (IT) and 10 IT programmers worked all weekend long, 20 hours, to restore and remediate the attack. 1. and 2. VVI's supervisor from information technology and an accounting clerk have assembled the following lists of costs: The IT Director earns a salary of $175,000 annually. Each IT person earns $40 per hour; IT personnel work scheduled shifts to provide 24 hour coverage; each of the 10 IT programmers had worked 40 hours the prior week and worked their scheduled 40 hours the week after the incident. The company's cost for benefits is approximately 25%. The police and prosecutor believe that the perpetrator worked alone, but his daughter works for VVI IT and earns $50 per hour and is normally scheduled for 40 hours per week. She averages 10 hours of overtime each week. The company put her on paid-administrative leave starting, Monday, July 6. She was paid administrative leave until police arrested her father on August 3, 28 days later. The daughter and VVI worked out an "exit" compensation package, where the daughter resigned immediately on August 3 and was paid for her expected earnings for 20 weeks. IT Department utilities and nonpersonnel operational costs for the month of the attack were approximately on budget of $500,000, though 5% higher than the prior year. Operational costs equal $672 per hour during the month of July. As part of the remediation process, the company purchased a redundant server. The cost of the server, peripherals, and software totaled $75,000. After the attack, the company purchased a new software protection package for $100,000 to prevent future attacks, similar to then July 4th attack. 1. Assuming that ALL costs above are damages, estimate incremental costs to VVI. 2. Assuming that true incremental costs to remediate and restore the Internet website are damages, estimate incremental costs to VVI. 3. The warehouse and distribution center usually operates 24 hours a day, 7 days per week. Normal productivity is 50 packages per hour. Sales are packaged and ready for shipping an average of two hours after the customers completes their purchase on the VVI website. During the Internet outage productivity in the warehouse operated as follows: 12-2 am-Normal workload = 100 packages 2-4 am-Productivity = 76 packages 4-6 am-Productivity = 50 packages 6-8 am-Productivity = 24 packages At the 8-hour mark, the warehouse and distribution center was at zero packages. 8-10 am-Productivity = 24 packages 10-12 pm-Productivity = 50 packages 12-2 pm-Productivity = 76 packages 2-4 pm-Productivity =100 packages The variable warehouse and distribution costs average $400 per hour; annual warehouse and distribution fixed costs average $250 per hour. The warehouse maintained full operational capability during the outage and restoration period. Estimate lost productivity to VVI. 4. VVI is an international retailer and the flow of retail sales is approximately equal for each hour in a 24-hour day. VVI has seasonal sales variability. The following are relevant sales data: Sales Total Annual July 96,000,000 10,000,000 Per Month 8,000,000 10,000,000 Per Day Per Hour 263,014 10,959 322,580 13,441 VVI sells generic low-cost groceries with lots of competition. When customers cannot buy from VVI, they typically do not return, but rather purchase from a competitor. VVI's historical gross margin is 45%; incremental profit margin is 20% and net profit margin is 7%. Estimate lost (a) sales and (b) profits to VVI.