Calculations
ROI Calculation
In the Risks workspace of an Asset Strategy, the ROI column appears in the Mitigating Actions section, as shown in the following image. The purpose of this column is to help the user identify the relative worth of each Action in terms of its ability to, in a cost-effective manner, mitigate the risks to which they are linked. A red outline has been added to this image to highlight the ROI column.
For each Action displayed in the grid, ROI is calculated as:
ROI = ([Unmitigated Financial Risk - Mitigated Financial Risk] – Annual Action Cost) / Annual Action Cost
If an Action mitigates only one Risk, the unmitigated financial risk and mitigated financial risk apply only to that Risk. If, however, an Action mitigates multiple Risks, the ROI calculation uses the sum of the differences between the unmitigated and mitigated financial risks for each Risk that the Action mitigates.
Relevance Calculations
Relevance explains how much Risk you are mitigating by performing an Action. The calculation is the Total Unmitigated Risk Rank minus the Total Action Mitigated Risk. In short, Relevance is the net non-financial benefit of performing the Action.
Relevance Calculation Formula
- Total Unmitigated Risk minus Total Action Mitigated Risk
Simple Example of a Relevance Calculation
- The Relevance formula for the below example is 500.1 - 25.1 = 475. 475 is the Relevance.
- The Relevance formula for the below example is 150.1 - 25.1 = 125. 125 is the Relevance.
Complex Example of a Relevance Calculation
- Total Unmitigated Risk Rank
- 150.1 + 183 = 333.1
- Total Action Mitigated Risk Rank
- 25.1 + 30.5 = 55.6
- Relevance
- 333.1 – 55.6 = 277.5
