What is a “risk-benefit analysis”?

A “risk-benefit analysis” is an approach used by courts to determine whether a product is defective. The analysis looks at the potential harm of a product versus the benefits it provides. Courts look at a variety of factors such as the manufacturer’s design, its production, and the safety warnings associated with the product. In terms of product liability law in Virginia, the courts must consider a variety of factors when the issue of product liability arises. Simply put, if a product was unreasonably dangerous or defective, the manufacturer may be held liable for injuries or damages caused by the product. When analyzing the potential harm caused by a product, a court may consider a risk-benefit analysis. This analysis looks at the likelihood and severity of the possible harm against the product’s usefulness. If the severity of harm made the product’s risks outweigh its benefits, the court may deem the product “unreasonably dangerous”, thus making the manufacturer liable for damages. A risk-benefit analysis must be conducted in terms of a reasonable consumer standard. That is to say, the court will determine if a reasonable person in the circumstances would have found the product too dangerous to use or would have recognized the potential risks. If the court finds that the risks of a product outweighed its benefits, the manufacturer may be held liable for damages.

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What is a “risk-benefit analysis”?

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