Risk-Benefit Analysis

Vasile Monica, anul IV CTI

Preliminaries

• Even without realising, everyone of us uses in our daily life the risk-benefit analysis. When we want to take a decision about something, we have to consider all the risks and the benefits of this action and make a comparison to see if it worth assuming the risks.

• Informative risk-benefit analysis is essential to the ultimate commercial success of our product. We are a leader in developing statistically rigorous, scientifically valid risk-benefit assessment studies that can be used to demonstrate the level of risk patients and other decision makers are willing to accept to achieve the benefits provided by your product.

Cautions

• When we decide to use the risk-benefit analysis in our project, we must take into consideration that it can be very dependent on the individual doing the analysis.

• When individuals are exposed to involuntary risk, risk which they have no control, they have the tendency to maximize the risks.

Evaluations of future risk

• Real future risk as disclosed by the fully matured future circumstances when they develop.

• Statistical risk, as determined by currently available data, as measured actuarially for insurance premiums. Sometimes, it may be too mathematical.

• Projected risk, as analytically based on system models structured from historical studies. It is based on the project`s “know-how”.

• Perceived risk, as intuitively seen by individuals; it is not so reliable.

Example

• Air transportation :

• - Flight insurance company - statistical risk.

• - Passenger - perceived risk.

• - Federal Aviation Administration(FAA) - projected risks.

• Hopefully the real risks turn out to be less than the projected risks. Although many people feel that flying is more risky than driving, statistics show otherwise.

Conclusion

• It is recommended to use in our project`s management plan the risk-benefit analysis in order to insure the quality of the project so that the clients can trust using our product.

• This analysis is used to establish whether is worth assuming some risks of the products comparing them with the resulting benefits.

• But we should not forget that perception of risk can vary!

References

• http://capita.wustl.edu/ME567_Informatics/concepts/riskben.html