In the energy sector, a company evaluates the risk of a crit…
In the energy sector, a company evaluates the risk of a critical supply disruption that occurs with a probability of 0.05. If a disruption occurs, there is a 40% chance it can be resolved within 24 hours (minor impact) and a 60% chance it will take up to a week to resolve (major impact). Assuming the costs are $1,000 per day for minor impacts and $10,000 per day for major impacts, what is the expected cost of a disruption event?