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The Ways to Estimate the Direct and Indirect Costs and Benefits of the Key Risk Management Decisions

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In this age of competitiveness, reputation and sustainability are two essential requirements of an organization operating in domestic or entering a new market. This is because; it takes a huge time-span for an organization to develop its reputation and brand image within the minds of its target customers. But, it might get destroyed just within some minutes due to worse quality of products or high environmental impact. Therefore, in order to save the organization from such types of risks, high level of investment might be done in selecting the raw material suppliers and the ingredients used.

Along with this, the organization might also invest high costs at the time of selecting inventive machines to reduce environmental impacts. This might prove effective in enhancing the corporate social responsibility (CSR) of the organization thereby amplifying its reputation and brand image as well in the foreign market. Side by side, due to high loyalty, the range of customers might get enhanced thereby reducing the fear of new entrants (Globe Business Publishing Ltd, 2013).   Other than this, varied types of training programs might also be implemented within the organization, so as to enhance the inner skills and talents of the employees to invent new product lines.

Only then, the organization might become able to retain the older customers and attract the new ones thereby enhancing its level of sustainability among others (Frenkel, 2005, pp. 135-172).   Thus, it might be estimated with the help of cost-benefit analysis (C-BA). It is a process to analyze the amount of revenue invested over the asset of the organization (Employee) and the benefit attained from that.   For example, if an organization invests about the US $ 50,000 over the training and development program of the employees, then it might desire to enhance its profits by approximately US$ 1 million along with a huge customer base as well (Fragniè re & Sullivan, 2006, p.

78-89).

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