Landslide-induced tsunamis in reservoirs often pose greater risks than landslides themselves. Existing studies and mitigation practices have prioritized increasing landslide stability to meet safety standards, incurring high costs and lacking sustainability. More than 5000 landslides have developed along the Three Gorges Reservoir banks in China, and some may trigger tsunamis. To effectively and sustainably manage risk of landslide-tsunami hazard chains (LTHC), we propose a new framework (based on quantitative risk analysis) involves decision-making based on risk characteristics and local economies, a strategy for selecting optimal risk control plan through cost–benefit analyses that consider long-term effectiveness and adverse effects, and dynamic management through iterative risk reassessment-recontrol cycles. The Liangshuijing landslide accelerated in 2009, posing a tsunami threat to the Yangtze River and coastal residents. Post-mitigation, the risks under four mitigation plans and combined scenarios were quantitatively evaluated. The mass removal plan reduces total risk by approximately 68%, less than the 80% reduction from the anti-slip pile plan, but with a 30-fold greater benefit–cost ratio (BCR). The surface drainage and monitoring network plans show limited long-term cost-effectiveness due to short measure lifetimes, however, their short-term BCRs exceed those of the mass removal plan due to lower direct costs. According to comprehensive long and short-term analyses, combined plans involving mass removal are the most cost-effective. Our results reveal how to select appropriate strategies for managing LTHC risk, how landslide mitigation controls tsunami risks, and how time-related parameters affect solution effectiveness. Our findings show that partially mitigating risks may provide more cost-effective and sustainable management of LTHCs than eliminating risks to negligible levels.