Risk-benefit analysis

Risk-benefit analysis is a systematic approach used to identify the potential benefits and risks associated with a particular action or decision. It is often used in fields such as medicine, engineering, environmental science, and business to make informed decisions.

Overview[edit | edit source]

Risk-benefit analysis involves the comparison of the risk of a situation to its related benefits. The goal is to determine whether the benefits outweigh the risks. This process is often used in decision-making to assess the potential impact of a decision or action.

Process[edit | edit source]

The process of risk-benefit analysis typically involves several steps:

Identification of risks: This involves identifying the potential risks associated with a particular action or decision. This can include both immediate and long-term risks.
Assessment of risks: Once the risks have been identified, they are then assessed in terms of their potential impact and likelihood of occurrence.
Identification of benefits: This involves identifying the potential benefits of the action or decision. This can include both immediate and long-term benefits.
Assessment of benefits: The potential benefits are then assessed in terms of their value and likelihood of occurrence.
Comparison of risks and benefits: The final step involves comparing the risks and benefits to determine whether the benefits outweigh the risks.

Applications[edit | edit source]

Risk-benefit analysis is used in a variety of fields:

In medicine, it is used to assess the potential benefits and risks of a particular treatment or procedure.
In engineering, it is used to assess the potential benefits and risks of a particular design or process.
In environmental science, it is used to assess the potential benefits and risks of a particular policy or action.
In business, it is used to assess the potential benefits and risks of a particular investment or strategic decision.

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v t e Risk management
Risk type & source	Business risks Reputational damage Personal risk Health risk Psychosocial hazard Natural risk Natural disaster Anthropogenic hazard Political risk Technology risk IT risk AI Macro risk / External risk Extreme risk Global catastrophic risk Safety hazard Security risk Vulnerability (computing) Threat Accident Operational risk Execution risk Model risk Reputational risk Country risk Legal risk Financial risk Credit risk Liquidity risk Interest rate risk Exchange rate risk Market risk Profit risk Systemic risk Strategic risk Residual risk Hazard Conflict Vulnerability Uncertainty
Countermeasures	Enterprise risk management Corporate governance Regulatory compliance GRC Internal control Personal risk management Health insurance Stress management Disease management Operational risk management Supply chain Project Quality Security management Identity and access management Vulnerability management Incident management Business continuity planning Disaster risk reduction Financial risk management Diversification Hedge Risk pool Strategic management Risk assessment Exposure assessment Hazard analysis Risk matrix FMECA Risk–benefit ratio Scenario planning Risk communication Warning system Precautionary principle Insurance Crisis management Disaster management Occupational safety and health Swiss cheese model
Related concepts	ISO 31000 ISO/IEC 31010 COSO Risk appetite Hazard map Rare events Problem solving

Risk-benefit analysis

Contents

Overview[edit | edit source]

Process[edit | edit source]

Applications[edit | edit source]

See also[edit | edit source]

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