COST-BENEFIT ASSESSMENT (CBA) 2nd Stakeholders’ Workshop Aschaffenburg, November, 26th, 2015 Jaime Martín, Project coordinator

Cost-Benefit Assessment (CBA) addresses the evaluation and analysis from an economical perspective done by considering monetary costs and benefits & framing conditions that influence the decision making Steps: External factors and limitations that have an effect on the decision can be categorised as framing conditions. These framing conditions play an extremely important role in all decision-making, and they have to be taken into consideration also in the context of security measures and their evaluation. Such framing conditions can include the following: Previous (strategic) decisions (e.g. follow certain security strategy, e.g. the EU initiative on the protection of critical infrastructure) Agreements (e.g. cost- & work-distribution between industries and government on certain security issues such as the national security of supply of critical goods) Threat perception and urgency (security incidents may trigger urgent needs to initiate some security measures, e.g. mass-killings in schools) Security governance (the rules of interacting within government and other stakeholders, budgeting processes) Uncertainty and risk-attitude of decision-maker(s) (e.g. the need to retrieve more information before commitment)

CBA: sample of introducing data For each alternative, data related to investment costs, future costs and benefits is provided   Investment costs: investments costs describe costs which are incurred at the beginning or implementation of the security measure. Future costs: future costs are annual costs which incur every year for operating the implemented security measure, its activities, personal or hardware. Future costs incur after implementation. Future benefits: if the security measure is implemented benefits will occur. The future benefits quantify the success or benefits of the implement measures by an annual value. Future benefits are realized after implementation during operation of the security measure. CUT RIGHT SIDE

CBA results Table of key indicator values: The results of the evaluation and calculation of the given values for investment costs, future costs and future benefits are summarized. Each row represents a security alternative. The results of the evaluation and calculation of the given values for investment costs, future costs and future benefits are summarized and displayed in a table. Each row represents a security measure. The columns represent the following values: Net Present Value NPV. NPV is the difference between the present value of cash inflows and the present value of cash outflows. The security measure is profitable if NPV > 0. The higher the NPV, the better the security measure is according to CBA. Present Value of Benefits PVB, Present Value of Costs PVC. Present value of benefits / costs is the estimated current value of a future amount to be received or paid out, discounted at the specified discount rate. Benefit Cost Ratio. The benefit-cost ratio (BCR) is a ratio attempting to identify the relationship between the cost and benefits of a proposed security measure / measures. The benefit-cost ratio (BCR) is calculated as the NPV of benefits divided by the NPV of costs where BCR >1 is good. Internal Rate of return IRR (%).The internal rate of return is the discount rate resulting NPV=0. The higher the IRR, the better the security measure is according to CBA. Pay Back Period (years). The pay-back period is the length of time required to recover the cost of a security measure / measures. The shorter the pay-back time, the better the security measure is. The costs and benefits are not discounted. Discounted Pay Back Period (years).The discounted payback period is the amount of time that it takes to cover the cost of a security measure, by adding positive discounted cash flow coming from the benefits of the implementation of a security measure. The shorter the pay-back time, the better the security measure is. Total costs and benefits. Total costs and benefits are the sum of discounted costs and benefits for the calculation period.

CBA: results (II) Total Costs and Benefits graph:visualize distribution of costs and benefits per security alternative covering the economical categories (i.e. investment costs, future costs, future benefits) To ensure the adequate promotion of the project, the activities and the results To develop dissemination means and strategies To define and carry out promotional activities, To actively involve external stakeholders, To disseminate results via conference papers, presentations and publications, To provide maximum exploitation of project results by project partners in their regular business, To provide sustainability of project results.

CBA: results (III) Break-even point(BEP): point at which costs and benefits are equal: e.g. there is no net loss or gain. One BEP-figure per alternative To ensure the adequate promotion of the project, the activities and the results To develop dissemination means and strategies To define and carry out promotional activities, To actively involve external stakeholders, To disseminate results via conference papers, presentations and publications, To provide maximum exploitation of project results by project partners in their regular business, To provide sustainability of project results.

CBA: results (IV) Break-even point: Another example for another alternative To ensure the adequate promotion of the project, the activities and the results To develop dissemination means and strategies To define and carry out promotional activities, To actively involve external stakeholders, To disseminate results via conference papers, presentations and publications, To provide maximum exploitation of project results by project partners in their regular business, To provide sustainability of project results.

CBA provides a pure economical approach Final considerations CBA provides a pure economical approach RRA delivers risk level based on likelihood and consequences CBA RRA (input provided from CBA to RRA to carry out the risk calculations) Non tangible criteria such as ethics and privacy are not managed  QCA To ensure the adequate promotion of the project, the activities and the results To develop dissemination means and strategies To define and carry out promotional activities, To actively involve external stakeholders, To disseminate results via conference papers, presentations and publications, To provide maximum exploitation of project results by project partners in their regular business, To provide sustainability of project results.

Thank you for your attention! Jaime Martín Pérez Project Coordinator ATOS Spain jaime.martinp@atos.net +34 912148908 www.cirasproject.eu Co-funded by the Prevention, Preparedness and Consequence Management of Terrorism and other Security-related Risks Programme of the European Union