What analysis technique has the greatest influence on deciding whether to implement a control?

What analysis technique has the greatest influence on deciding whether to implement a control?

• A. Cost-benefit analysis
• B. Payback period
• C. Root cause analysis
• D. Net present value (NPV)

Answer: (A)

The technique that has the greatest influence on the decision to implement a control is cost-benefit analysis. This method provides a comprehensive framework for evaluating the financial implications of implementing a control by comparing the costs associated with the control against the benefits it will provide. By conducting a cost-benefit analysis, organizations can quantify the potential impacts, such as risk reduction, operational efficiencies, and compliance improvements that the control may offer, and measure them against the expenses, including implementation, maintenance, and operational costs. This analytical technique helps stakeholders make informed decisions by determining whether the expected benefits justify the investment. While payback period and net present value can provide additional insights into the financial viability of an initiative, they focus more on specific financial metrics rather than an overall comparison of costs and benefits. Root cause analysis, on the other hand, is useful for identifying underlying issues but does not directly assess the financial justification for implementing a particular control. Thus, for determining whether to proceed with a control, the comprehensive nature of cost-benefit analysis is pivotal.

The technique that has the greatest influence on the decision to implement a control is cost-benefit analysis. This method provides a comprehensive framework for evaluating the financial implications of implementing a control by comparing the costs associated with the control against the benefits it will provide.

By conducting a cost-benefit analysis, organizations can quantify the potential impacts, such as risk reduction, operational efficiencies, and compliance improvements that the control may offer, and measure them against the expenses, including implementation, maintenance, and operational costs. This analytical technique helps stakeholders make informed decisions by determining whether the expected benefits justify the investment.

While payback period and net present value can provide additional insights into the financial viability of an initiative, they focus more on specific financial metrics rather than an overall comparison of costs and benefits. Root cause analysis, on the other hand, is useful for identifying underlying issues but does not directly assess the financial justification for implementing a particular control. Thus, for determining whether to proceed with a control, the comprehensive nature of cost-benefit analysis is pivotal.