What Is Risk-Benefit Analysis?

CAPULE, KELVIN CARLO Q.
JULY 10, 2019

CESE – 2014151813 ESE158
1. What is Risk-Benefit Analysis?
A risk-benefit analysis is a comparison between the risks of a situation and its benefits. The goal
is to figure out whether the risk or benefit is most significant. It's used often in medicine, because
every medical procedure has risks associated with it, and some procedures that could be
beneficial actually turn out to statistically cause more harm than good. That's how medical
researchers figure out whether certain procedures are worth doing and what types of people will
benefit.
2. Why is Risk-Benefit Assessment Important?
Risk management in play contexts is different from workplace or factory contexts in one crucial
respect. In play provision, a degree of risk is often beneficial, if not essential. Children and
young people enjoy challenging, adventurous play opportunities where they can test themselves
and extend their abilities. Giving children the chance to encounter hazards and take risks
provides other benefits, such as the chance to learn how to assess and manage these and similar
risks for themselves. Hence accidents and injuries are not necessarily a sign of problems, because
of the value of such experiences in children’s learning. Unlike conventional risk assessment,
RBA takes account of benefits by bringing together consideration of risks and benefits when
deciding on appropriate responses.
Judgements about the balance between risks and benefits can be complicated. They involve
many factors, and are often partly subjective. For example, children may be unpredictable in
their play, and have widely varying interests and competences; different providers may have
different aims, goals and values, which may be expressed in widely varying approaches; and the
context of a site, and the level and style of supervision, are important local factors. Guidance
such as play equipment standards help to set reference points, but do not provide an absolute
answer, nor do they take into account local circumstances. Some play environments and
structures are complex, and go beyond everyday experience. Judgements about structural
stability, water hygiene, head traps or structures built into trees, for instance, may require some
technical knowledge and specialist expertise. However, other cases will not involve such
expertise: decisions can be based on everyday experience, skills and knowledge. Different
situations will require different types and levels of expertise, and this form is designed to reflect
this.
3. Why do we need a Risk Management?
The purpose of risk management is to identify potential problems before they occur so that risk-
handling activities may be planned and invoked as needed across the life of the product or project
to mitigate adverse impacts on achieving objectives.
Risk management is a continuous, forward-looking process that is an important part of business
and technical management processes. Risk management should address issues that could endanger
CAPULE, KELVIN CARLO Q. JULY 10, 2019
CESE – 2014151813 ESE158
achievement of critical objectives. A continuous risk management approach is applied to

effectively anticipate and mitigate the risks that have critical impact on the project.
Effective risk management includes early and aggressive risk identification through the
collaboration and involvement of relevant stakeholders. Strong leadership across all relevant
stakeholders is needed to establish an environment for the free and open disclosure and discussion
of risk.
Although technical issues are a primary concern both early on and throughout all project phases,
risk management must consider both internal and external sources for cost, schedule, and technical
risk. Early and aggressive detection of risk is important because it is typically easier, less costly,
and less disruptive to make changes and correct work efforts during the earlier, rather than the
later, phases of the project.
4. Give one (1) Risk Management Tool used in our country. Explain how it helps to
risk assessment.
Enterprise Risk Management
As the most successful model of Public-Private Partnership (PPP) in the Philippines, Manila
Water continues to grow and improve as a leader in the provision of water, used water and
environmental services in the country. Risk management is a key contributor to this success. At
all levels of the organization, risk management is consistently used as a tool for effective
decision-making, planning and operations, resulting in a resilient and agile organization that is
able to thrive amidst difficulties in its regulatory and physical environment.
Enterprise Risk Management in Manila Water
Manila Water operates in a regulated and dynamic business where uncertainties, both detrimental
and opportune to the Company, abound. The Company is accountable to its regulators,
shareholders, employees and customers, among others, even as profitability, sustainable
development and corporate social responsibility are expected to be continuously enhanced. In
order to achieve its corporate objectives, Manila Water recognized the need for the active
management of risks inherent in its business which involves the entire organization.
Manila Water continues to implement its Enterprise Risk Management (ERM) Program based on
a globally-accepted approach, the ISO 31000:2009. The program helps Manila Water and its
subsidiaries monitor and manage the strategic, regulatory, operational and financial risks. It is a
proactive process that is well linked to corporate goals and objectives, embedded in the corporate
culture and is well integrated into critical and strategic planning and operational processes of the
company. The ERM Program has been cascaded to all the departments in Manila Water. The
same has been implemented in its subsidiaries in Boracay, Cebu, Clark and Laguna and its
affiliates in Vietnam to ensure the attainment of their respective growth objectives. The
implementation of the ERM Program to the subsidiaries and affiliates considers the unique
business and risk environment where these subsidiaries operate.
CAPULE, KELVIN CARLO Q. JULY 10, 2019
CESE – 2014151813 ESE158
The ERM Program operationalizes the Company’s Manual of Corporate Governance which
mandates the Board of Directors (BOD) to ensure the presence of organizational and procedural
controls supported by an effective management information system and risk management
reporting system. In addition, the Company’s Risk Committee, as stated in the Risk Committee
Charter, is required to provide oversight to management functions relating to strategic, financial,
operational, compliance, legal and other risks of the Company which involves periodic
disclosure of significant risk exposures and related risk management activities.
The President is the comprehensive risk executive and is ultimately responsible for ERM
priorities, strategies, tolerances and policies. He chairs the Risk Management Executive
Committee (RMEC) which is composed of top management and the Chief Risk Officer (CRO).
The RMEC provides oversight and input to the President and to the Board to enable them to
formulate better and informed decisions on matters relating to risks. The RMEC provides
direction on the design and implementation of appropriate systems, tools and methodologies to
support the ERM process and other risk management activities, and designates owners of
specific risks and enablers of the ERM process (ERM Champions).
The CRO is the ultimate champion of ERM at Manila Water. Supporting the CRO is the
Enterprise Risk and Insurance Management (ERIM) Department. It is responsible for developing
risk management tools, methodologies and processes, and leads the implementation and
dissemination of ERM across Manila Water in coordination with the risk owners or the CRO and
ERM Champions of the business units.

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CAPULE, KELVIN CARLO Q.

JULY 10, 2019

1. What is Risk-Benefit Analysis?

2. Why is Risk-Benefit Assessment Important?

achievement of critical objectives. A continuous risk management approach is applied to

Enterprise Risk Management

Enterprise Risk Management in Manila Water

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