Risk–benefit ratio

A risk–benefit ratio (or benefit-risk ratio) is the ratio of the risk of an action to its potential benefits. Risk–benefit analysis (or benefit-risk analysis) is analysis that seeks to quantify the risk and benefits and hence their ratio.

Analyzing a risk can be heavily dependent on the human factor. A certain level of risk in our lives is accepted as necessary to achieve certain benefits. For example, driving an automobile is a risk many people take daily, but it is mitigated by the perception of their ability to manage the risky situation. 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 (a notable example being the common bias in the perception of risk in flying vs. driving).