Complete a cost vs. benefit analysis report for your risk reduction program.
Cost-benefit analysis refers to a technique that is used in the comparison of the total costs that are incurred in a certain project or a program with the benefits, and it uses monetary units as the common metric. The costs that would be incurred in the implementation of a risk-reduction program includes the total cost of the activity including both the direct and the indirect costs as well as the costs of the potential risks that are likely to arise (Pearce, Atkinson, & Mourato, 2006). The cost depends on the approach of the program, and it looks into all the activities which are conducted as part of the systematic analysis and in the planning process including research. Additional expenses regarding money, time and other resources are considered to be more reasonable from the perspective of the willingness of the members of the public to incur expenses because these costs to a great extent aids in the reduction of the level or costs associated with the risks
In the implementation of a risk reduction program, benefits refer to the advantages that the organization is likely to accrue as a result of the implementation. The benefits include all the direct as well as the indirect revenues and the intangible benefits such as increased level of productivity due to factors such as the improvement in morale and safety of the employee’s and also an increase in the level of sales as a result of the customer’s goodwill. Lots of benefits are derived from the use of additional resources to inhibit risks from taking place.
Cost-benefit analysis aids in the calculation of the benefit or the net cost that is associated with a certain program. A lot of care should be taken in the process of cost-benefit analysis to ensure that neither cost nor benefits are underestimated or overestimated. Before the implementation of the risk reduction program, one should compare the aggregate cost and benefits to ensure that the benefits of implementation outweigh the cost. A program is said to be rational if the costs are less than the benefits and in case of this, it can thus be easily put forward. In the case that the costs are greater than the benefits, a review of the project should be done to increase the benefits or decrease the cost so that the program can be made viable (Quah, & Toh, 2012).
References
Pearce, D., Atkinson, G. & Mourato, S. (2006). Cost-benefit analysis and the environment : recent developments. Paris: Organisation for Economic Co-operation and Development.
Quah, E. & Toh, R. (2012). Cost-benefit analysis : cases and materials. Milton Park, Abingdon, Oxon New York: Routledge.
