he chart below contains a description of Jack Company's top risk, an inherent risk assessment, three risk response alternatives, and a residual risk assessment for each response alternative. Also, Jack's management accountant estimates that the incremental cost of implementing risk response A is $2,600,000 and the incremental cost of implementing risk response B is $1,000,000.

Risk	Inherent Risk			Residual Risk
	Likelihood	Impact (on operating costs)	Risk Response Alternatives	Likelihood	Impact (on operating costs)
Lose top employee talent to competitors	50%	$10,000,000	A: Improve Jack's employee training program	40%	$3,000,000
			B: Improve Jack's employee compensation and benefits package	20%	$8,000,000
			C: Take no action	50%	$10,000,000

The residual risk for Jack Company associated with risk response alternative B is:

a.$5,000,000.

b.$1,000,000.

c.$1,600,000

d.$3,200,000.