An important step in an effective risk assessment is a(n)

An important step in an effective risk assessment is a(n)

• A. Cost-benefit analysis
• B. Scenario planning
• C. SWOT analysis
• D. Gap analysis

Answer: (A)

Weighing the costs and benefits of a risk control to decide if it’s worth implementing. In an effective risk assessment, you identify risks and consider how to respond, and a cost-benefit analysis provides the numeric comparison that shows whether the savings from reducing risk exceed the cost of the control. It translates both the potential losses from risk and the price of mitigation into a common unit, usually money, so you can compare options, prioritize those with the greatest net benefit, and justify decisions to allocate resources. Scenario planning helps explore how risks might unfold in different futures, but it doesn’t quantify the value of specific controls. SWOT analysis looks at overall strengths, weaknesses, opportunities, and threats, and gap analysis focuses on gaps between current and desired performance. These can inform understanding, but they don’t provide the direct cost-benefit lens needed to decide on risk responses.

Weighing the costs and benefits of a risk control to decide if it’s worth implementing. In an effective risk assessment, you identify risks and consider how to respond, and a cost-benefit analysis provides the numeric comparison that shows whether the savings from reducing risk exceed the cost of the control. It translates both the potential losses from risk and the price of mitigation into a common unit, usually money, so you can compare options, prioritize those with the greatest net benefit, and justify decisions to allocate resources. Scenario planning helps explore how risks might unfold in different futures, but it doesn’t quantify the value of specific controls. SWOT analysis looks at overall strengths, weaknesses, opportunities, and threats, and gap analysis focuses on gaps between current and desired performance. These can inform understanding, but they don’t provide the direct cost-benefit lens needed to decide on risk responses.