All business investments require trade-offs between risk and reward.

Question

All business investments require trade-offs between risk and reward. Does the interest rate on a new bond issue adequately compensate for the risk of default Are the potential revenues fromentering a new emerging market greater than the risk that the investments will be confiscated by a new regime? Does the value of oil extracted via deep-water, offshore drilling outweigh the chance of a catastrophic accident? Tough questions must be answered by weighing up the business imperatives against a calculation of the risk — and the greater the risk, the harder it is to make the case for investment.

Technology investments are no different. They, too, have always been a trade-off between risk and return. However, for enterprise technology, increased global connectivity is raising the stakes on both sides of the equation. The commercial rewards from tapping into this connectivity are enormous, but the more tightly we are connected, the more vulnerabilities exist that attackers can exploit and the more damage they can do once inside. Therefore, when a manufacturer invests in a new product life-cycle management system, it is making a bet that the system will not enable the theft of valuable intellectual property. When a retailer invests in mobile commerce, it is betting that cyber-fraud won’t critically damage profitability. When a bank invests in customer analytics, it is betting that the sensitive data it analyzes won’t be stolen by cyber-criminals. The odds on all those bets appear to be shifting away from the institutions and toward cyber-attackers. They could swing decisively their way in the near future given most companies’ siloed and reactive approach to cybersecurity.

Our interviews with business leaders, chief information officers (CIOs), chief technology officers (CTOs), and chief information security officers (CISOs) indicate that concerns about cyber-attacks are already affecting large institutions’ interest in and ability to create value from technology investment and innovation. Potential losses, both direct and indirect, reduce the expected economic benefits of technology investments, as do the high cost and lengthy time frame required to build the defense mechanisms that can protect the organization against a growing range of attackers. In short, the models companies use to protect themselves from cyber-attack are limiting their ability to extract additional value from technology.

Concern about cyber-attacks is already having a noticeable impact on business along three dimensions: lower frontline productivity, fewer resources for information technology (IT) initiatives that create value, and — critically — the slower implementation of technological innovations.    1 
 1. The primary purpose of this passage is to

(A) identify gaps in the business world that lead to cybersecurity breaches
(B) refute the notion that companies are failing to thwart hackers
(C) discuss how the modern business marketplace is all about risk and reward
(D) explain how attention to cybersecurity impacts companies’ technological innovation
(E) demonstrate how today’s hackers are winning the fight against big corporations

2 
 2. According to the passage, all of the following decrease the economic benefits of technological investment EXCEPT:

(A) experiencing stolen intellectual property
(B) realizing indirect losses
(C) weighing business outcomes and risks
(D) investing in cybersecurity protection technology
(E) reacting to cyber-threats only when necessary

3 
 3. When the author asserts that companies take a “siloed and reactive” approach to cybersecurity, he is implying that companies

(A) perform thorough research before implementing programs meant to improve cybersecurity
(B) combat problems after they have occurred
(C) have made strides against hackers in the ultimate battle of cybersecurity
(D) invest too much in cybersecurity
(E) take unnecessarily large investment risks and disregard the importance of cybersecurity

4 
 4. Which of the following is most likely an example of intellectual property as mentioned in the second paragraph?

(A) works of art posted to social media
(B) personal information, such as Social Security numbers or banking information
(C) computers and related technological devices
(D) customer and client lists and related contact information
(E) an outline of a streamlined manufacturing process

RC Butler 2022  -  Practice Two RC Passages Everyday.   
Passage # 197 Date: 17-May-2022
 This question is a part of RC Butler 2022 .  Click here for Details

VIGHNESHKAMATH · Answer

In my opinion, answers are 1-D, 2-C,3-B,4-E,5-D. Awaiting for the OA. Q.5 is irrelevant to the passage and just a CR question.

Thank You
Vighnesh

hydr01 · Answer

How long should these passages be taking to read and answer the questions? Currently, it takes me about 15 min to read and answer the questions with fairly high accuracy.

VidishaBanerjee · Answer

Please provide the official explanation of question no. 2.

Posted from my mobile device

Sajjad1994 · Answer

Official Explanation

2. According to the passage, all of the following decrease the economic benefits of technological investment EXCEPT:

Difficulty Level:   700+

Explanation

The  third paragraph  clearly states that indirect losses and the cost of defending against cyber-threats reduce the benefts of technology investments, so you can eliminate  Choices (B)  and  (D) .

Likewise, in the  second paragraph , you find evidence to support that theft of intellectual property is a risk of increased global connectivity created by technology investment, so  Choice (A)  is out.

The last sentence of the second paragraph also suggests that the way that companies approach cyber-threats — reacting to them only when they occur — is costly and will likely result in more cyber-attacks. Therefore, Choice (E) likely decreases the beneft of investing in technology.

The passage doesn’t indicate that the mere act of weighing risk and reward in itself incurs cost, so  Choice (C)  is the answer that has the least chance of decreasing the potential gains of investing in technology.

Answer: C

singhaz · Answer

All business investments require trade-offs between risk and reward. Does the interest rate on a new bond issue adequately compensate for the risk of default Are the potential revenues fromentering a new emerging market greater than the risk that the investments will be confiscated by a new regime? Does the value of oil extracted via deep-water, offshore drilling outweigh the chance of a catastrophic accident? Tough questions must be answered by weighing up the business imperatives against a calculation of the risk — and the greater the risk, the harder it is to make the case for investment.

Summary: All investments carry risk & higher risk means it is not sensible to make investment.

Technology investments are no different. They, too, have always been a trade-off between risk and return. However, for enterprise technology, increased global connectivity is raising the stakes on both sides of the equation. The commercial rewards from tapping into this connectivity are enormous, but the more tightly we are connected, the more vulnerabilities exist that attackers can exploit and the more damage they can do once inside. Therefore, when a manufacturer invests in a new product life-cycle management system, it is making a bet that the system will not enable the theft of valuable intellectual property. When a retailer invests in mobile commerce, it is betting that cyber-fraud won’t critically damage profitability. When a bank invests in customer analytics, it is betting that the sensitive data it analyzes won’t be stolen by cyber-criminals. The odds on all those bets appear to be shifting away from the institutions and toward cyber-attackers. They could swing decisively their way in the near future given most companies’ siloed and reactive approach to cybersecurity.

Summary: With connected technologies, more people are vulnerable to cyber attacks hence investment in new product needs this consideration.

Our interviews with business leaders, chief information officers (CIOs), chief technology officers (CTOs), and chief information security officers (CISOs) indicate that concerns about cyber-attacks are already affecting large institutions’ interest in and ability to create value from technology investment and innovation. Potential losses, both direct and indirect, reduce the expected economic benefits of technology investments, as do the high cost and lengthy time frame required to build the defense mechanisms that can protect the organization against a growing range of attackers. In short, the models companies use to protect themselves from cyber-attack are limiting their ability to extract additional value from technology.

Summary: Cyber attacks concerns big institutions. Cyber attacks are limiting companies capability.

Concern about cyber-attacks is already having a noticeable impact on business along three dimensions: lower frontline productivity, fewer resources for information technology (IT) initiatives that create value, and — critically — the slower implementation of technological innovations.

Summary: Cyber attacks decreases productivity & resources to create value, slows technological progress.

Overall: passage starts with risks in investment and then discusses about risk because of cyber attacks and their impacts.

1. The primary purpose of this passage is to

(A) identify gaps in the business world that lead to cybersecurity breaches
No
(B) refute the notion that companies are failing to thwart hackers
(C) discuss how the modern business marketplace is all about risk and reward
(D) explain how attention to cybersecurity impacts companies’ technological innovation
True
(E) demonstrate how today’s hackers are winning the fight against big corporations

2. According to the passage, all of the following decrease the economic benefits of technological investment EXCEPT:

(A) experiencing stolen intellectual property
Therefore, when a manufacturer invests in a new product life-cycle management system, it is making a bet that the system will not enable the theft of valuable intellectual property.

(B) realizing indirect losses
Potential losses, both direct and indirect, reduce the expected economic benefits of technology investments.

(C) weighing business outcomes and risks
True

(D) investing in cybersecurity protection technology
as do the high cost and lengthy time frame required to build the defense mechanisms that can protect the organization against a growing range of attackers

(E) reacting to cyber-threats only when necessary
They could swing decisively their way in the near future given most companies’ siloed and reactive approach to cybersecurity.In short, the models companies use to protect themselves from cyber-attack are limiting their ability to extract additional value from technology.

3. When the author asserts that companies take a “siloed and reactive” approach to cybersecurity, he is implying that companies
They could swing decisively their way in the near future given most companies’ siloed and reactive approach to cybersecurity.

(A) perform thorough research before implementing programs meant to improve cybersecurity
(B) combat problems after they have occurred
Yes
(C) have made strides against hackers in the ultimate battle of cybersecurity
(D) invest too much in cybersecurity
(E) take unnecessarily large investment risks and disregard the importance of cybersecurity

4. Which of the following is most likely an example of intellectual property as mentioned in the second paragraph?

(A) works of art posted to social media
(B) personal information, such as Social Security numbers or banking information
(C) computers and related technological devices
(D) customer and client lists and related contact information
(E) an outline of a streamlined manufacturing process
True

5. I bought a pair of glasses from an optometrist. One of the lenses regularly pops out of the frame. Therefore, this optometrist doesn’t know how to make a good pair of glasses. The reasoning in the argument is most vulnerable to criticism on the grounds that the argument

(A) does not allow the optometrist a chance to defend himself
(B) does not consider the possibility that other optometrists also make defective frames
(C) criticizes the optometrist’s use of a particular technique when making glasses
(D) jumps to the conclusion that the defect in the glasses must be due to the optometrist’s lack of skill
true
(E) accuses the optometrist of deliberately sabotaging the glasses

Rabab36 · Answer

Sajjad1994 
 GMATNinja

can someone explain Question -4
how to approach it

Sajjad1994 · Answer

Official Explanation

4. Which of the following is most likely an example of intellectual property as mentioned in the second paragraph?

Difficulty Level:   700

Explanation

The  second paragraph  specifically links the intellectual property to a new product life-cycle management system. The answer that relates most directly to proprietary product information is  Choice (E) , information regarding a proprietary product-manufacturing process.

Choice (A)  describes intellectual property but not that which would likely be leaked in a new product life-cycle management system. The other choices aren’t examples of intellectual property.

Answer: E

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All business investments require trade-offs between risk and reward.

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All business investments require trade-offs between risk and reward.

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