Risk Management Cost-Benefit Scenario Calculator: estimate annual expected avoided loss based on annual expected risk cost ($), annual risk-reduction program...
Formula
const annualExposure = Math.max(0, Number(inputs.annualRiskCost || 0)); const annualProgramCost = Math.max(0, Number(inputs.annualRiskReductionCost || 0)); const reductionRate = Math.min(1, Math.max(0, Number(inputs.assumedLossReductionPct || 0) / 100)); const years = Math.max(1, Number(inputs.timeHorizonYears || 1)); const annualExpectedAvoidedLoss = Math.round((annualExposure * reductionRate) * 100) / 100; const totalProgramCost = Math.round((annualProgramCost * years) * 100) / 100; const totalExpectedAvoidedLoss = Math.round((annualExpectedAvoidedLoss * years) * 100) / 100; const netExpectedBenefit = Math.round((totalExpectedAvoidedLoss - totalProgramCost) * 100) / 100; const simpleRoiPct = totalProgramCost > 0 ? Math.round((netExpectedBenefit / totalProgramCost * 100) * 100) / 100 : 0; return { annualExpectedAvoidedLoss, totalProgramCost, totalExpectedAvoidedLoss, netExpectedBenefit, simpleRoiPct };Annual Expected Risk Cost ($)
50,000
Annual Risk-Reduction Program Cost ($)
20,000
Assumed Loss Reduction (%)
30
Time Horizon (Years)
5
Use the result to compare providers, request quotes, or send the scenario to a specialist when the numbers matter.
With the default inputs, a 30% reduction applied to $50,000 of annual expected risk cost produces $15,000 in annual expected avoided loss. Over 5 years, modeled avoided loss totals $75,000 while program cost totals $100,000, resulting in a negative $25,000 net expected benefit and -25% simple ROI.
Use this insurance calculator to compare scenarios before committing money, time, or a provider conversation.
The estimate combines Annual Expected Risk Cost ($), Annual Risk-Reduction Program Cost ($), Assumed Loss Reduction (%) and returns Annual Expected Avoided Loss, Total Program Cost, Total Expected Avoided Loss.
If the result changes your decision, verify the current quote, rate, eligibility rule, or provider term before acting.
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This calculator provides coverage estimates based on the inputs provided. It does not constitute insurance advice, a policy quote, or a binding offer. Coverage terms, exclusions, and premiums vary by carrier and jurisdiction. Consult a licensed insurance agent or broker.
Reviewed by the CalculateThis.ai editorial team. Updates: check back for latest parameters. Tools are for estimation only — verify with current provider terms.