COST - BENEFIT ANALYSIS
What Is It
Cost-benefit analysis is a method to compare total cost
and benefits estimates of a risk mitigation strategy.
The precise cost of benefits is not calculated but the
ratio on benefits to costs to decide or to support a
decision on alternative strategies, picking the
strategy with the highest ratio, while falling within
the overall cost constraints.
When To Use
Use this method to determine the ratio of benefits to
cost of mitigation strategies to decide among the
alternatives.
Benefits
This method
- Helps decision makers to decide by providing a
quantitative viewpoint on the alternatives.
- Depending on the required degree of accuracy, may
only take a short time.
- Can be used when two or more alternatives are
being considered with fixed costs, fixed benefits, or
when both costs and benefits vary.
|
