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Hinman Pulse

May 23, 2012

Economics of Protection: Cost-Benefit Analysis

by Brian Katz


Effective risk mitigation strategies are those that optimize the delicate balance of benefit of protection against cost of implementation.  Taking a holistic approach, Hinman's Hazard Exposure tool provides an innovative platform to study building and site geometry with respect to the relative cost of various protection solutions.

Considering an identified threat concern, a "Protection Gradient" curve is developed, which plots relative cost on the vertical axis and percentage of building protection on the horizontal axis.  Analysis of the curve indicates the extent to which hazard scenarios can be effectively mitigated from a cost perspective, focusing on favorable relationships between threat and damage wherein increasing threat increments produce relatively small changes in expected damage.  A steep slope indicates significant relative financial investment to achieve a disproportionately small amount of protection.  Consider the curve below as an example - the cost difference in providing 90% versus 100% façade protection is 5-fold.



This level of analysis empowers building owners to make educated decisions to take advantage of potential savings by accepting a degree of damage if it does not compromise the project's protection goals.  Furthermore, retrofit/upgrade options developed as part of quantitative assessment efforts can be fitted to the Protection Gradient curve, providing a clear and visual side-by-side comparison that allows you to make informed decisions to meet your risk and cost goals.

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