Risk–benefit ratio

A risk–benefit ratio is the ratio of the risk of an action to its potential benefits. Risk–benefit analysis is analysis that seeks to quantify the risk and benefits and hence their ratio. Exposure to personal risk is recognized as a normal aspect of everyday life. A certain level of risk in our lives is accepted as necessary to achieve certain benefits. With most of these risks, some sort of control over the situation is felt. For example, driving an automobile is a risk most people take daily. "The controlling factor appears to be their perception of their individual ability to manage the risk-creating situation."

Analyzing the risk of a situation is, however, very dependent on the individual doing the analysis. When individuals are exposed to involuntary risk (a risk over which they have no control), they make risk aversion their primary goal. Under these circumstances individuals require the probability of risk to be as much as one thousand times smaller than for the same situation under their perceived control.^[1]

Evaluations

Evaluations of future risk:

• Real future risk, as disclosed by the fully matured future circumstances when they develop.
• Statistical risk, as determined by currently available data, as measured actuarially for insurance premiums.
• Projected risk, as analytically based on system models structured from historical studies.
• Perceived risk, as intuitively seen by individuals.

Medical research

For research that involves more than minimal risk of harm to the subjects, the investigator must assure that the amount of benefit clearly outweighs the amount of risk. Only if there is a favorable risk–benefit ratio may a study be considered ethical.

The Declaration of Helsinki, adopted by the World Medical Association, states that biomedical research cannot be done legitimately unless the importance of the objective is in proportion to the risk to the subject. The Helsinki Declaration^[2] and the CONSORT Statement^[3] stress a favorable risk–benefit ratio.

See also

• Benefit shortfall
• Cost–benefit analysis
• Odds algorithm
• Optimism bias
• Reference class forecasting

References

1. "Risk-Benefit Analysis". Capita.wustl.edu. Retrieved 2013-10-25.
2. World Medical Association Declaration of Helsinki: Ethical Principles for Medical Research Involving Human Subjects
3. "Consort". Consort-statement.org. Retrieved 2013-10-25.