How does one determine the Risk Assessment Code (RAC)?

The Risk Assessment Code (RAC) is determined by combining severity and probability, which provides a quantitative measure to assess the level of risk associated with an activity or potential event. This method involves evaluating both the potential impact of a risk (severity) and the likelihood of its occurrence (probability). By analyzing these two factors together, organizations can classify risks in a systematic way, allowing for more informed decision-making regarding risk management strategies and mitigation efforts.

In contrast, evaluating cost versus benefits focuses on financial implications rather than risk categorization. Assessing previous incidents is important for understanding historical trends and learning from past experiences, but it does not provide a direct mechanism for calculating the RAC itself. Consulting external experts can offer valuable insights and perspectives but also does not establish the RAC on its own. The combination of severity and probability is the most effective and recognized approach for accurately determining the Risk Assessment Code.