A primary function of risk management is the identification
of cost-effective controls. In selecting appropriate
controls, which of the following methods is best to study
the effectiveness of adding various safeguards in reducing
vulnerabilities?
A. "What if" analysis
B. Traditional cost/benefit analysis
C. Screening analysis
D. A "back-of-the-envelope" analysis
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Answer Posted / guest
Answer: A
Choice (A) is the correct answer. With the "what if"
analysis method, the effect of adding various safeguards
(and therefore reducing vulnerabilities) is tested to see
what difference each makes. Trade-offs can then be made
based on the cost of the safeguard and its benefit in terms
of reduced risk. Choice (B) is incorrect. In traditional
cost/benefit analysis, the cost is based on the purchase and
operating costs of safeguards. The benefit is calculated
based on an expected decrease in future losses. Choice (C)
is incorrect. Screening analysis can be used to concentrate
on the highest-risk areas. One method is to examine risks
with very severe consequences, such as a high dollar loss or
loss of life. Choice (D) is incorrect. With "back-of-the
envelope" analysis, a high-medium-low ranking can often
provide all the information needed. However, especially for
the selection of expensive safeguards or the analysis of
systems with unknown consequences, more in-depth analysis
may be warranted.
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