Total risk exposure

If RACs are, in fact, going to serve as the drivers in the system and the basis for risk acceptance and resource allocation decisions, the numbers generated must have a positive correlation to the risk involved and to the resources required to control the hazard. A universal RAC matrix would provide a means of comparing relative risks associated with multiple projects, evaluating the allocation of funds, and determining the cost-effectiveness of various controls. Ideally, this universal risk assessment code matrix could provide an evaluation of risks in absolute as well as relative terms. Chapter 12 contains a proposed universal RAC matrix (Total Risk Exposure Codes). The use of a meaningful, quantified, expanded universal RAC matrix may represent a practical approach to probabilistic risk assessment. 

Review the Total Risk Exposure Code matrix and risk acceptance criteria in Chapter 11. Adopt the risk assessment and acceptance criteria and methodology (as presented or as modified by the planning group) or develop and adopt alternatives. 

Figure 11-6 Total risk exposure code (TREC) matrix.

The total risk exposure code is then determined by adding the severity code and the exposure code (Fig. 11-6). 

Total risk exposure (TRE) The total number of dollars estimated to be at risk as a result of the particular hazard being evaluated. The Total Risk Exposure is calculated quite simply by subtracting 5 from the TREC and adding that number of zeros to 5. 

Annual risk exposure (ARE) The annual risk exposure is the total risk exposure divided by the estimate project life in years. 

Define and discuss total risk exposure codes. 

Therefore, extreme value projection may be useful in calculation probabilities to be used for risk assessment codes or total risk exposure codes based on actuarial data. Extreme value projection can also be useful in communicating hazard information to management and may aid in drawing management attention to a problem before a serious accident occurs. 

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