Cost-Benefit Analysis and Investment Risk Assessment. Threshold Values According to the ALARP Logic

For investments in the civil sector, the paper proposes a risk assessment model that introduces risk acceptability and tolerability thresholds according to the As Low As Reasonably Practicable (ALARP) logic. The idea is to use the Capital Asset Pricing Model (CAPM) because it is able to associate return limit values, and therefore risk, to the project. The joint use of the CAPM and statistical survey tools leads to the estimation of investment risk thresholds on objective data, depending on both the production sector and the reference territory. An application to the building construction sector in Campania Region (Italy) verifies the effectiveness of the model.