Determining that a risk has been reduced to ALARP involves an assessment of the risk and costs involved in taking measures to avoid that risk, and a comparison of the two according to
cost–benefit analysis (CBA). In this context, risk is the combination of the frequency (likelihood) and the consequence of a specified hazardous event. Several factors are likely to be considered when deciding whether or not a risk has been reduced as far as reasonably practicable: • Health and safety guidelines and codes of practice • Manufacturer's specifications and recommendations • Industry practice • International standards and laws • Suggestions from advisory bodies • Comparison with similar hazardous events in other industries • Cost of further measures would be disproportionate to the risk reduction benefits they would achieve • Cost of assessing the improvement gained in an attempted risk reduction. In extremely complex systems, this can be very high, and could be the limiting factor in practicability. A difficulty arising in CBAs is assigning a meaningful and agreed financial
value of life. In the context of ALARP, financial values to impacts to the environment, physical assets, production stoppage, company reputation, etc. are assigned, which also presents significant challenges to the analysis. == Carrot diagrams ==