Which of the following indicates when a company might not be viable after a disaster?
Which of the following indicates when a company might not be viable after a disaster?
Maximum tolerable downtime (MTD) indicates the maximum amount of time that an organization can tolerate the disruption of critical business processes. If a company exceeds its MTD, the company might face severe adverse effects, such as significant financial losses or even bankruptcy. This metric is crucial for determining the point at which the lack of a critical resource would make the company non-viable.
Maximum Tolerable Downtime. "This metric allows stakeholders and planners to agree upon a point in time where the lack of a critical resource would cause severe adverse effects for the enterprise. For example, if an airline cannot fly planes for 6 months, then they will burn through their cash reserves and may go bankrupt. The MTD, therefore, becomes the line in the sand that cannot be crossed."
Maximum time a company can withstand being inoperable.
D. Annual loss expectancy The Annual Loss Expectancy (ALE) is a measure of the expected financial loss from a specific risk or threat over a one-year period. It is calculated by multiplying the Annual Rate of Occurrence (ARO) by the Single Loss Expectancy (SLE). ALE helps organizations assess the financial impact of various risks and threats. In the context of disaster recovery and business continuity planning, ALE can be used to evaluate the financial viability of an organization after a disaster. If the ALE for a specific disaster scenario exceeds the organization's financial resources or if the potential losses are so significant that they would make the company unsustainable, it indicates that the company might not be viable after the disaster.
MTD...based on the discussion below, as well as ChatGPT 3.5's agreement
Maximum Tolerable Downtime Based off of NIST: https://csrc.nist.gov/glossary/term/maximum_tolerable_downtime#:~:text=Definitions%3A,harm%20to%20the%20organization's%20mission.. I also saw an image on this website which is sort of similar to the one on page 50 of the book (lesson 3 implementing business continuity and disaster recovery) Even thought the book doesn't cover it.
ALE should be the answer. ALE is part of risk assessment and used to calculate expected monetary loss if a risk is realized. You then use the ALE to see if your company can financially withstand a disaster. Also, maximum tolerable downtime is not mentioned in the Sybex textbook nor the exam objectives while ALE is.
ALE should be the answer
A high ALE suggests that the financial impact of a disaster could be severe enough to jeopardize the company's viability. It helps assess whether the cost of mitigating the risk (through measures like disaster recovery planning and investments in resilience) is justified compared to the potential losses. If the ALE exceeds the company's ability to absorb losses or recover financially, it indicates that the company might not be able to sustain its operations after a disaster.