A hazard has been analyzed and a PLL of 0.5 per event is estimated. Event likelihood is 0.01 per year. How is the consequence per event defined in monetary terms?

A hazard has been analyzed and a PLL of 0.5 per event is estimated. Event likelihood is 0.01 per year. How is the consequence per event defined in monetary terms?

• A. $40,000,000
• B. $20,000,000
• C. $10,000,000
• D. $200,000

Answer: (C)

To determine the consequence per event in monetary terms when provided with a Probability of Losses (PLL) and the event likelihood, you can use the formula for calculating the expected annual loss: Expected Annual Loss = PLL × event likelihood × consequence per event. In this case, the PLL is given as 0.5 per event and the event likelihood is 0.01 per year. We can rearrange the formula to solve for the consequence per event: Consequence per event = Expected Annual Loss / (PLL × event likelihood). To find the expected annual loss, we set it up as follows: 1. Calculate the combined terms: PLL × event likelihood = 0.5 × 0.01 = 0.005. 2. The expected loss per year should then equal the annual losses associated with the hazard. If we take the monetary threshold for the analysis to consider significant losses, we expect this annual loss to be at a specific dollar amount. Assuming the total hazard cost you are computing aligns with $200,000 as resulting from the 0.005 from previous calculations of hazard incident per year (0.005 is a significant rate that should match a higher significant loss directly tied to substantial hazardous situations). The chosen consequence

To determine the consequence per event in monetary terms when provided with a Probability of Losses (PLL) and the event likelihood, you can use the formula for calculating the expected annual loss:

Expected Annual Loss = PLL × event likelihood × consequence per event.

In this case, the PLL is given as 0.5 per event and the event likelihood is 0.01 per year. We can rearrange the formula to solve for the consequence per event:

Consequence per event = Expected Annual Loss / (PLL × event likelihood).

To find the expected annual loss, we set it up as follows:

1. Calculate the combined terms: PLL × event likelihood = 0.5 × 0.01 = 0.005.

2. The expected loss per year should then equal the annual losses associated with the hazard. If we take the monetary threshold for the analysis to consider significant losses, we expect this annual loss to be at a specific dollar amount.

Assuming the total hazard cost you are computing aligns with $200,000 as resulting from the 0.005 from previous calculations of hazard incident per year (0.005 is a significant rate that should match a higher significant loss directly tied to substantial hazardous situations). The chosen consequence