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The economics of risk.
Hearl-F; Pana-Cryan-R; Mclaughlin-C
Synergist 2014 May; 25(5):35-38
We make personal decisions about risk every day. These decisions depend on our understanding of risk and the options we have to reduce or control it. To understand risk, we need to understand both the probability and severity of the potential loss. We may have many options to control risk, but their potential costs and benefits may vary widely. Considering the risk-cost tradeoffs allows us to understand which risk control options make the most sense. Risk assessment results that are used to make risk management decisions generally do not have bright lines of demarcation for deciding safe from unsafe. The level of risk deemed to be safe (or tolerable or acceptable) is often a judgment based on ethical considerations and technical and economic factors in addition to risk estimates. Regardless of how risk management decisions are made, economic analysis is an additional informative tool that can guide these decisions.
Risk-analysis; Economics; Decision making; Risk assessment; Risk management; Risk factors
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Page last reviewed: September 2, 2020
Content source: National Institute for Occupational Safety and Health Education and Information Division