### Tab 1: Policy Terms & Exclusions - **Base Coverage Limits**: Standard Tier-A cyber lia… — GMAT

### Tab 1: Policy Terms & Exclusions
- Base Coverage Limits: Standard Tier-A cyber liability insurance covers incident losses up to $1,000,000 per breach event. - **Deductible**: A base deductible of$ 100,000 applies to all Tier-A claims.
- SLA Penalties: If containment time exceeds 24 hours, the gross claim payout (before deductible) is reduced by 20%.
- Exclusion Exception (Section 4.1): If a breach involves fewer than 10,000 records AND root-cause analysis verifies an unpatched zero-day vulnerability, the 20% SLA penalty is waived, but the base deductible increases to $150,000.

### Tab 2: Incident Response Audit (Q2 Event #408)
- Affected Records: 8,500 customer identity records compromised.
- Time to Containment: 28 hours (exceeding 24-hour baseline SLA).
- Audit Findings: Breach originated via an unpatched zero-day exploit in the primary firewall firmware.
- Total Assessed Direct Loss: $600,000.

### Tab 3: Claims Calculation Log
- Formula: Net Payable = Gross Loss $\times$ (1 - SLA Penalty Rate) - Applicable Deductible.

Statement: Based on the three sources, the net insurance payout payable to the insured organization for Incident #408 is $380,000.

Answer: Answer

Answer

False

The correct response is False because under Tab 1 (Section 4.1), the breach meets both criteria for an exclusion exception: fewer than 10,000 affected records (8,500) and a verified zero-day vulnerability. This waives the 20% SLA containment penalty but increases the deductible to

150,000. Subtracting the

150,000 deductible from the

600,000 gross loss yields a net payout of

450,000, not $380,000.

Step-by-Step Solution

Evaluate containment SLA conditions from Tab 1 and Tab 2

Containment took 28 hours, which exceeds the 24-hour limit, normally triggering a 20% penalty.

Identify if SLA penalties apply under standard policy terms.

Check Exclusion Exception rules in Tab 1 against audit facts in Tab 2

Section 4.1 exception applies because records affected (8,500) < 10,000 and the cause was a verified zero-day exploit.

Determine if policy exceptions override standard SLA penalty rules.

Adjust calculation parameters based on Section 4.1

SLA Penalty = 0%; Deductible increases from

100,000 to

150,000.

Apply the modified financial terms dictated by the exception.

Calculate the net payout

Net Payable =

600,000 -

150,000 = $450,000.

Reconcile the final payout using the Tab 3 payout formula.

Key Concept

Reconciling policy rules and conditional exceptions across multiple sources to evaluate financial outcomes.

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