Cost-Benefit Analysis of Safety Measures

In this chapter an innovative approach is described to evaluate investments in safety measures under an economics perspective. By accurate risk and safety assessment it is possible to assign costs and benefits to a safety measure. In this way, the foundation of robust and long-sighted risk and safety analysis can be built for operational safety within any organization. Decision-making might be significantly improved by prioritizing and refocusing on safety rather than on short-term organizational objectives. Cost-benefit analysis can be used to evaluate investment decisions by translating safety and risk concepts into monetary values integrating well-known indicators and measures from economic theory such as net present value, internal rate of return, and payback period.