On the Use of Cost-Benefit Analysis in ALARP Processes
Volume 3, Number 3, July 2007 - Paper 5 - pp. 345 - 353
T. AVEN and E. ABRAHAMSENUniversity of Stavanger, Norway
(Received on July 3, 2006)
The ALARP principle expresses that risk should be reduced to a level that is low as reasonably practicable, and risk reducing measures should be implemented provided the costs are not grossly disproportionate to the benefits gained. To verify ALARP, different tools are being used, including cost-benefit analyses and cost-effectiveness analyses. In this paper we discuss the role of such analyses in the ALARP process; in particular we address the common procedures for increasing the value of a statistical life and adjusting the discount rate to check against the gross disproportion criterion. We conclude that standard cost-benefit analyses should be used with care as the expected net present value calculations to large extent ignore uncertainties. The adjustment procedures to account for the uncertainties are considered ad hoc with a strong element of arbitrariness.
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