Reading Passage 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.
“All business investments require trade-offs between risk and reward”- is a GMAT reading comprehension passage along with a series of answers. The candidates ought to have a thorough knowledge and concrete idea about the English GMAT reading comprehension. The GMAT Reading Comprehension extract begins with five sets of comprehension questions. The GMAT Reading Comprehension questions intend to ask the candidates to, analyze the passage carefully and utilize learning or concepts. The candidate can polish them up by practising these GMAT Reading Comprehension Practice Questions.
Solutions and Explanation
- 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
Answer: (D)
Explanation: The main objective of the passage is to focus on the fact that concerning with cyber-attacks facilitate a noticeable impact on business growth. The company is facing a lagging implementation of technological innovations because of this. Therefore, option D is the correct answer as it represents the relevant information mentioned in the passage. The rest of the options hence get eliminated.
- 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
Answer: (C)
Explanation: According to the passage, the third paragraph refers to the indirect losses and the expense of safeguarding against cyber threats. These factors help to decrease the benefit of technological investments. Therefore options B and D get eliminated. The second paragraph suggests that stolen intellectual property is a hazard of expanded global connectivity. It is also developed by technological investment. Hence, option A also gets out of scope. The second paragraph also implies that the companies react to cyber threats on and when it is needed. Option E, therefore, get eliminated as it also reduces the usefulness of technological investments. Thus, option C is the correct answer since there is no mention of weighing risks and business outcomes in the passage.
- 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
Answer: (B)
Explanation: As per the passage discussion, the companies take an initiative of “siloed and reactive” approach to cybersecurity in future. The author mainly suggests that the companies fight against the problems once and when it takes place. Therefore, option B is the correct answer as it holds the accurate information given in the passage. The remaining options get eliminated as they do not satisfy the passage argument.
- 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
Answer: (E)
Explanation: The second paragraph of the passage depicts a connection between the intellectual property with the life-cycle management system of a new product. Therefore option E is the correct answer since it illustrates the manufacturing process of a proprietary product. The remaining options are incorrect as they do not fulfil the criteria of the given passage.
- 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
(E) accuses the optometrist of deliberately sabotaging the glasses
Answer: (D)
Explanation: The statement illustrates the fact that one of the lenses of the glasses come out of the frame is due to the lack of skill o the optometrist. Therefore option D is the correct answer as it justifies the given argument of the statement. The remaining options thereby get out of scope since they do not fulfil the criteria of the given statement.
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