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The Real Cost of Risk Treatments

The Nature of Risk Treatments


Here are several levels of expenditure to consider when implementing treatments:


  • Sunk costs – funds that have already been irrevocably committed.

  • Compliance costs – costs of doing business (legally) or essentially, the ‘license to operate’.

  • Base (or Prudent) costs – basic costs to provide essential basic risk management.

  • Best Practice – investments that achieve an appropriate return on investment (ROI) to reduce risk to As Low as Reasonably Practicable (ALARP)

  • Discretionary–items which may or may not achieve a required ROI but are likely to reduce risk even further.



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