Principles of Risk-Benefit Decision Making

Correct answer: B — Statement I & III only correct

Evaluating the four statements

Statement I is correct. Risk–benefit analysis compares the possible advantages of an action with its possible adverse consequences. This requires considering not only the size of outcomes but also their likelihood and uncertainty.

Statement II is incorrect. A favourable initial comparison does not justify proceeding without any further evaluation. The decision may still require checking assumptions, assessing severe low-probability outcomes, choosing controls and examining the risk that remains after those controls.

Statement III is correct. Examining both benefits and risks gives decision-makers a more complete basis for choosing between alternatives. It helps explain what can be gained, what can go wrong and what trade-offs are involved.

Statement IV is incorrect. The aim is not to maximize potential risks. It is to make a justified decision about the benefits achievable and the level of risk that can be accepted or reduced.

The resulting sequence is True, False, True, False. Therefore, only Statements I and III are correct, which corresponds to option B. Risk–benefit analysis supports a reasoned decision; it does not automatically approve an action merely because an estimated benefit is larger than an estimated loss.