Once the foreign physical asset risks have been analyzed their potential impact must be measured. As discussed in Unit 1, one method of determining impact is by applying Tables B. C and D found in Appendix B. Let’s take the previous example of CanCocoa, the hypothetical Canadian confectionery company. Instead of engaging new suppliers. CanCocoa has decided to purchase a small operation in Ecuador and they want to protect their new foreign physical assets. The practitioner completing the analysis has collected the following data: • Assume the nationally reported tosses from 2014-2021 were highest in the following areas: Flood (32.3 percent of incidents) Drought (27.5 percent of incidents) Eruption (21.7 percent of incidents) Landslide (7.8 percent of incidents) There are 35 volcanoes in Ecuador and 29 percent of the population tives within 30 km from a volcano; the new facility is not located within this range. • Ecuador’s GDP is very negatively affected by El Nino events, which occur approximately every 10 years • Estimate of probable losses in the region (probabilistic risk) for Ecuador are: Earthquake: 85.3 percent Flood: 14.5 percent < > FITT 417 Apply Your Learning 1. Why is it important to analyze and mitigate foreign physical asset risk? 2. Go to page 417 and answer the table. A travel services company based in Singapore is purchasing a branch office for a new venture in Mumbai, India. The following threat profile has been developed. a. Complete the chart with the associated threat values b. Rank the risks in priority order. c. If the organization decides to reduce the risk related to theft, what strategy could it implement?

Suppose that GLC earns a $2,000 profit each time person buys a car. We want to determine how the expected profit earned from a customer depends on the quality of GLC’s cars. We assume a typical customer will purchase 10 cars during her lifetime. She will purchase a car now (year 1) and then purchase a car every five years-during year 6, year 11, and so on. For simplicity, we assume that Hundo is GLC’s only competitor. We also assume that if the consumer is satisfied with the car she purchases, she will buy her next car from the same company, but if she is not satisfied, she will buy her next car from the other company. Hundo produces cars that satisfy 80% of its customers. Currently, GLC produces cars that also satisfy 80% of its customers. Consider a customer whose first car is a GLC car. If profits are discounted at 10% annually, use simulation to estimate the mean value of this customer to GLC. Round your answers to the nearest dollar. s 2000 Also estimate the mean value of a customer to GLC if it can raise its customer satisfaction rating to 85%, to 90%, or to 95%. You can interpret the satisfaction value as the probability that a customer will not switch companies. Satisfaction rating Customer value to GLC 85% X 104.76 90% 103.80 95% 104.76