Howard College Risk Management Discussion Please do the requested in the image on MATLAB and a quick word report about it. 1. You are the Risk manager for

Howard College Risk Management Discussion Please do the requested in the image on MATLAB and a quick word report about it. 1. You are the Risk manager for Home Depot and your management has asked you to analyze the risk
for the incorporation of a new security management suite (SMS). The SMS displays a single measure of
the state of the system which has a random component due to the complexity of the environment. It
displays a value r that has the following properties:
When an attack is present it has a Gaussian pdf with a mean of 11 and a variance of 2
When an attack is absent it has a Gaussian pdf with a mean of 6 and a variance of 3
Your job is to show your management the tradeoff they have by controlling the threshold T that
determines whether an alarm is signaled. There are costs associated with each decision
If you miss the attack you can expect to lose $1million on average (Type I)
If you have a false alarm it will cost the company $10 thousand in operational costs (Type II)
a. Explain to your management the complex nature of the risk tradeoff that they face.
b. Compute the Type 1 and Type Il risks as a function of the threshold T
c. Determine the value of T for an equal cost decision for Type I and Type II

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