Your company is running its corporate office in a rented business premises. The Landlord of the building has increased the rent of other companies and there are 80% chances of increase in the rent of the office occupied
CS Professional · Governance, Risk Management, Compliances and Ethics · PYQS · December 2019
Your company is running its corporate office in a rented business premises. The Landlord of the building has increased the rent of other companies and there are 80% chances of increase in the rent of the office occupied by your company within the next year. If this happens, it will cost your business an extra ₹5,00,000 over the next year. Calculate the risk value.
Answer & Explanation:
The formula for calculating the Risk Value is: Risk Value = Probability of Event x Cost of Event By putting the values, we get: 0.80 (Probability of Event) x ₹500,000 (Cost of Event) = ₹400,000 (Risk Value)
Topics: Risk Management
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