Question

Discuss the risk-benefit analysis, please provide examples of its application.

Answer 1

A risk benefit analysis refers to the ratio which is derived out of the situations or comparisons made between the risks and the potential benefits which could result from any course of action. It's used to depict whether the action undertaken is making more risk or more benefit. The risk benefit analysis is used both in daily lives as well as in professional lives as well.

Daily Life Example: Taking the example of the covid-19 situation, we all the lockdown has resulted in the markets being closed. Thus, imagine there is an urgent need of milk or any food item in your home. You want to go out but you are afraid of the police and the risk of the virus even. Thus, the analysis you'll think of if the need of the milk is so high then eventually you'll go out in the market to buy because benefit derived is more than the risk undertaken. You'll take further protection and mask to protect yourself from the risk and thus buy the milk because of the benefit it contains.

Professional example: Professional example could be taken is of Amazon. Amazon knows how bad this situation is where people are not allowed to go out and do delivery. Thus, it still is making efforts to deliver the essential items anyhow to the doorsteps for its customers, but why? because the benefit that would arise because of all those efforts are more than the risk undertaken. The benefit of profits, marketing and the goodwill Amazon is making is higher than the risk undertaken. This is risk benefit analysis.