Citation

von Winterfeldt D, Farrow RS, John RS, Eyer J, Rose AZ, Rosoff H. Risk Anal. 2019; ePub(ePub): ePub.

Affiliation

Center for Risk and Economic Analysis of Terrorism Events (CREATE), University of Southern California, Los Angeles, CA, USA.

Copyright

(Copyright © 2019, Society for Risk Analysis, Publisher John Wiley and Sons)

DOI

10.1111/risa.13403

PMID

31613022

Abstract

This article describes a methodology for risk-informed benefit-cost analyses of homeland security research products. The methodology is field-tested with 10 research products developed for the U.S. Coast Guard. Risk-informed benefit-cost analysis is a tool for risk management that integrates elements of risk analysis, decision analysis, and benefit-cost analysis. The cost analysis methodology includes a full-cost accounting of research projects, starting with initial fundamental research costs and extending to the costs of implementation of the research products and, where applicable, training, maintenance, and upgrade costs. The benefits analysis methodology is driven by changes in costs and risks leading to five alternative models: cost savings at the same level of security, increased security at the same cost, signal detection improvements, risk reduction by deterrence, and value of information. The U.S. Coast Guard staff selected 10 research projects to test and generalize the methodology. Examples include tools to improve the detection of explosives, reduce the costs of harbor patrols, and provide better predictions of hurricane wind speeds and floods. Benefits models and estimates varied by research project and many input parameters of the benefit estimates were highly uncertain, so risk analysis for sensitivity testing and simulation was important. Aggregating across the 10 research products, we found an overall median net present value of about $385 million, with a range from $54 million (5th percentile) to $877 million (95th percentile). Lessons learned are provided for future applications.

© 2019 Society for Risk Analysis.

Language: en

Keywords

Homeland security research; benefit-cost analysis; risk informed; signal detection; value of information