What is the purpose of Risk Assessment Code (RAC) in operational risk management?

The purpose of the Risk Assessment Code (RAC) in operational risk management is fundamentally to prioritize hazards based on their severity and probability. The RAC provides a systematic approach to assess risks, allowing organizations to understand which hazards pose the greatest threat and should be addressed first. By categorizing risks in this manner, it assists decision-makers in focusing on the most critical issues and implementing appropriate controls to mitigate them.

Utilizing the RAC streamlines the risk management process, ensuring that resources are allocated effectively to minimize risks during operations. This prioritization helps in developing safety measures and risk mitigation strategies that are proportionate to the level of threat identified. Each assigned code reflects a combination of the potential severity of an incident and the likelihood of its occurrence, which is essential for maintaining safety and operational effectiveness.