Section: Risk, Response and Recovery
Explanation
Explanation/Reference:
Disaster Recovery should never be considered a discretionary expense. It is far too important a task. In order to maintain the continuity of the business Disaster Recovery should be a commitment of and by the organization.
A discretionary fixed cost has a short future planning horizon-under a year. These types of costs arise from annual decisions of management to spend in specific fixed cost areas, such as marketing and research. DR would be an ongoing long term committment not a short term effort only.
A committed fixed cost has a long future planning horizon- more than on year. These types of costs relate to a company's investment in assets such as facilities and equipment. Once such costs have been incurred, the company is required to make future payments.
The following answers are incorrect:
committed expense. Is incorrect because Disaster Recovery should be a committed expense.
enforcement of legal statutes. Is incorrect because Disaster Recovery can include enforcement of legal statutes. Many organizations have legal requirements toward Disaster Recovery.
compliance with regulations. Is incorrect because Disaster Recovery often means compliance with regulations.
Many financial institutions have regulations requiring Disaster Recovery Plans and Procedures.