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.