In a factory, there are 200 full-time employees who all are exposed to the same risk. A risk analysis for the factory has been performed and the following information has been arrived at: • The only type of accidents that can cause fatalities at the factory is fires. • The frequency of fire is 0.0028 per year • The average consequence if a fire occurs is 1.2 fatalities. (a) Calculate AIR for the employees in the factory. (b) Assume that the operation at the factory is changed and that a toxic chemical is introduced, leading to another type of accidents that may occur. If this is released, employees may be killed. The annual frequency of release is 4.2 × 10−4 , and the average consequence if a release occurs is 12 fatalities. Recalculate AIR for the employees in the factory taking into account the changes. (c) Calculate FAR for both cases above.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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In a factory, there are 200 full-time employees who all are exposed to the same risk. A
risk analysis for the factory has been performed and the following information has been
arrived at:
• The only type of accidents that can cause fatalities at the factory is fires.
• The frequency of fire is 0.0028 per year
• The average consequence if a fire occurs is 1.2 fatalities.
(a) Calculate AIR for the employees in the factory.
(b) Assume that the operation at the factory is changed and that a toxic chemical is introduced, leading to another type of accidents that may occur. If this is released, employees may be killed. The annual frequency of release is 4.2 × 10−4 , and the average consequence if a release occurs is 12 fatalities. Recalculate AIR for the employees in the factory taking into account the changes.
(c) Calculate FAR for both cases above.

>> it is a risk management question

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