Make your assumptions visible.

Baseline annual expected loss = probability ÷ 100 × event impact.

Residual annual expected loss = baseline × (1 − impact reduction ÷ 100).

Residual loss plus control cost = residual annual expected loss + annual control cost.

Modelled net annual benefit = baseline − residual loss − annual control cost. A negative value means the modelled reduction is smaller than the control cost.

The control changes the severity of a single event, not its probability. The model assumes at most one event per year and does not model correlations, loss distributions, tail losses, insurance terms, tax or discounting. Expected loss is an average, not the most likely loss in a year.

Compare several plausible input sets and examine which assumptions change the result most. A favourable number does not establish that a control will work. Consider implementation, operational and non-financial effects separately. This educational tool does not provide underwriting, investment or financial advice.