Financial Indicators for Safety: Cost of Risk, Life Cycle Cost, ROI and the Effect of Losses
ASP written lesson, 15 min read. ASP Domain 1: Mathematical Calculations
Written with AI help from the rules it covers, then fact-checked against them. Study aid, not site-specific safety advice. The official rule controls.
What you'll learn
- "Calculate cost of risk and express it per $1,000 of revenue"
- "Calculate the sales needed to offset an uninsured loss"
- "Compare two controls by life cycle cost in present value"
- "Calculate ROI, payback, NPV and benefit-cost ratio and state each one's weakness"
- "Calculate discounted payback and annualized ROI and explain when payback should not be used"
- "Explain real versus nominal discount rates and why they must not be mixed"
What this lesson covers
This lesson teaches the financial indicators a safety professional uses to justify or compare controls: cost of risk, expected loss, the sales needed to replace a loss, life cycle cost in present value, return on investment (ROI), simple and discounted payback, annualized ROI, net present value (NPV) and the benefit-cost ratio.
This lesson is included with a pass
Written lessons come with every ASP pass, along with the video lessons, the question bank, mocks and the tutor. $80 per exam for 6 months, or $143 for all three for 12 months.
Try the free payback and return on investment calculations practice questions