Aggravate or Mitigate? How Cost Analysis Associated into Risk Management Process

Winda Nur Cahyo(1*), Eky Fasich Trialopa(2), Hari Purnomo(3),

(*) Corresponding Author


In most researches in the area of risk management, the result stops at proposing the mitigation strategies. The number of researches on associating cost analysis into the risk management process is very limited. This paper proposes a practical process on how cost analysis can be associated into the risk management process especially in the area of manufacturing. The process of the risk management is conducted as usual, started by selecting the potential risk and finding the major causes. Then, a risk map and its rubric of risk likelihood and severity are developed, and the major causes are plotted into it to select the priority of the major causes and the proposed mitigation strategy is developed. Then, the poposed strategy is compared with the current strategy based on the cost generated using the developed equation. The result shows the proposed mitigation strategy is selected because it saves approximately IDR 2 million per order. It indicates that cost analysis can be successfully associated into the risk mitigation process and generates a comprehensive recommendation to the decision maker.


cost analysis; risk management; cost of risk mitigation; mitigation strategies; cost mitigation analysis

Full Text:



Abdel-Basset, M., Gunasekaran, M., Mohamed, M., Chilamkurti, N. (2019). A framework for risk assessment, management and evaluation: Economic tool for quantifying risks in supply chain. Future Generation Computer Systems, 90, 489-502. doi:

Bandaly, D., Shanker, L., Şatır, A. (2018). Integrated Financial and Operational Risk Management of Foreign Exchange Risk, Input Commodity Price Risk and Demand Uncertainty. IFAC-PapersOnLine, 51(11), 957-962. doi:

Bergion, V., Lindhe, A., Sokolova, E., Rosén, L. (2018). Risk-based cost-benefit analysis for evaluating microbial risk mitigation in a drinking water system. Water Research, 132, 111-123. doi:

Chen, Y.-L., Chuang, Y.-W., Huang, H.-G., Shih, J.-Y. (2019). The value of implementing enterprise risk management: Evidence from Taiwan’s financial industry. The North American Journal of Economics and Finance, 100926. doi:

Duan, H., Zhang, G., Wang, S., Fan, Y. (2019). Integrated benefit-cost analysis of China's optimal adaptation and targeted mitigation. Ecological Economics, 160, 76-86. doi:

Etinay, N., Egbu, C., Murray, V. (2018). Building Urban Resilience for Disaster Risk Management and Disaster Risk Reduction. Procedia Engineering, 212, 575-582. doi:

Galve, J.P., Cevasco, A., Brandolini, P., Piacentini, D., Azañón, J. M., Notti, D., Soldati, M. (2016). Cost-based analysis of mitigation measures for shallow-landslide risk reduction strategies. Engineering Geology, 213, 142-157. doi:

Gillich, A., Brodecki, L., Hufendiek, K. (2019). Impacts of complementing goals besides emission targets on CO2 mitigation cost: A model-based analysis. Energy Strategy Reviews, 26, 100395. doi:

González, D.P., Monsalve, M., Moris, R., Herrera, C. (2018). Risk and Resilience Monitor: Development of multiscale and multilevel indicators for disaster risk management for the communes and urban areas of Chile. Applied Geography, 94, 262-271. doi:

Li, J., Zhou, Y. (2020). Optimizing risk mitigation investment strategies for improving post-earthquake road network resilience. International Journal of Transportation Science and Technology. doi:

Liu, L., Liu, X., Liu, G. (2018). The risk management of perishable supply chain based on coloured Petri Net modeling. Information Processing in Agriculture, 5(1), 47-59. doi:

Maes, J., Parra, C., Mertens, K., Bwambale, B., Jacobs, L., Poesen, J., . . . Kervyn, M. (2018). Questioning network governance for disaster risk management: Lessons learnt from landslide risk management in Uganda. Environmental Science & Policy, 85, 163-171. doi:

Mashi, S.A., Oghenejabor, O.D., Inkani, A.I. (2019). Disaster risks and management policies and practices in Nigeria: A critical appraisal of the National Emergency Management Agency Act. International Journal of Disaster Risk Reduction, 33, 253-265. doi:

Oger, R., Bénaben, F., Lauras, M., Montreuil, B. (2018). Towards Decision Support Automation for Supply Chain Risk Management among Logistics Network Stakeholders. IFAC-PapersOnLine, 51(11), 1505-1510. doi:

Ojeka, S.A., Adegboye, A., Adegboye, K., Alabi, O., Afolabi, M., Iyoha, F. (2019). Chief financial officer roles and enterprise risk management: An empirical based study. Heliyon, 5(6), e01934. doi:

Organ, J., Stapleton, L. (2019). A socio-technical systems framework for risk management in financial services: Some empirical evidence from a case study of the Irish Banking Crisis. IFAC-PapersOnLine, 52(25), 148-153. doi:

Ritchie, B.W., Jiang, Y. (2019). A review of research on tourism risk, crisis and disaster management: Launching the annals of tourism research curated collection on tourism risk, crisis and disaster management. Annals of Tourism Research, 79, 102812. doi:

Rostamzadeh, R., Ghorabaee, M.K., Govindan, K., Esmaeili, A., Nobar, H.B.K. (2018). Evaluation of sustainable supply chain risk management using an integrated fuzzy TOPSIS- CRITIC approach. Journal of Cleaner Production, 175, 651-669. doi:

Sherwin, M.D., Medal, H., Lapp, S.A. (2016). Proactive cost-effective identification and mitigation of supply delay risks in a low volume high value supply chain using fault-tree analysis. International journal of production economics, 175, 153-163. doi:

Singh, S. K. (2017). An analysis of the cost-effectiveness of arsenic mitigation technologies: Implications for public policy. International Journal of Sustainable Built Environment, 6(2), 522-535. doi:

Valinejad, F., & Rahmani, D. (2018). Sustainability risk management in the supply chain of telecommunication companies: A case study. Journal of Cleaner Production, 203, 53-67. doi:

Yang, Q., Wang, Y., & Ren, Y. (2019). Research on financial risk management model of internet supply chain based on data science. Cognitive Systems Research, 56, 50-55. doi:

Article Metrics

Abstract view(s): 645 time(s)
PDF: 457 time(s)


  • There are currently no refbacks.