312-76V3: EC-Council Disaster Recovery Professional (EDRP)

By ECCouncil · Question Mode

QuestionQ91

VerifiedDisaster Recovery Planning Process

James owns a company that delivers 24x7 telephonic technical support for a technology giant. During a risk assessment, he determined that, if a natural disaster rendered his facility defunct, he would need at least a hundred telephone lines operational within eight hours to keep the business running.

He contacted a service provider that assured him a hundred virtual connections could be provided in such a case within that time frame. This service would cost James $10,000 per day. James has a cold backup site that takes 48 hours to become functional. Making it a warm or hot site would cost much more than the virtual service. Therefore, James retained the cold site and set aside $20,000 from company funds for the virtual service should this scenario occur. What is this emergency fund that James set aside called?

Explanation

Risk Adjusted Return on Capital (RAROC) is a risk-adjusted performance and capital-allocation framework. The $20,000 is capital reserved for the quantified contingency cost: two days of virtual connections at $10,000 per day while the cold site becomes operational. The European Central Bank distinguishes RAROC, meaning risk-adjusted return on capital, from RORAC, meaning return on risk-adjusted capital.

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