You might input these risks into the risk matrix as follows: Some risks from ordinary activities could be: There are plenty of risks we could face each day, many we don’t even think about. Imagine you are conducting a risk assessment for your day-to-day life. Let’s take a look at a risk matrix example.Īs you can see, the risk matrix is a fairly simple tool, although it can be made more complex depending on how you choose to use it within your organisation. How you label these categories is entirely up to you. Categories along the consequence axis could be called ‘very low’, ‘low’, ‘medium’, ‘high’, and ‘extreme’ or ‘catastrophic’.

This traffic light system makes it easy to quickly understand levels of risk.ĭespite this basic structure, risk matrices can vary greatly depending on your organisation and how you use them.įor example, the likelihood axis can be divided into more specific categories such as ‘certain’, ‘likely’, ‘possible’, ‘unlikely’ and ‘rare’. If it is medium, it is shown in yellow or orange. A risk that has an overall low level of risk is colour-coded green. Within a risk matrix, levels of risk are further highlighted with a colour-coded system. Conversely, if the risk falls low on the likelihood scale and low on the consequence scale, the level of risk would be very low. If the risk is high on the likelihood scale and high on the consequence scale, you can define the level of risk as very high. The risks that your organisation could face are placed within the risk matrix depending on where they fall on this scale. Each axis follows a scale of very low to very high. They are typically 5x5 grids that show the likelihood of risks occurring along the Y axis and the severity of their consequences along the X axis. Risk matrices all follow the same basic structure. In this blog, we explain what a risk matrix is in further depth, examine the pros and cons, and outline how you can create and use a risk matrix should you choose to use one.Ī risk matrix is a tool that can help you understand the risks your organisation faces, and their overall likelihood and severity, in a visual way. For those working in risk management, as well those in senior positions, they provide an accessible overview of the risks an organisation faces, potentially making it easier to decide how risks should be dealt with. Although there are some limitations to risk matrices – in part because of their simplicity – there are numerous benefits. Of course, you can lay it out in any way that you choose as long as you’re following those general guidelines that will help you the most during the qualitative analysis of the risks of your project.Īnd that is the Probability and Impact Matrix for reviewing Risk.A risk matrix is a simple, visual tool that you can use to determine levels of risk. And that’s the way that they’re prioritizing in this particular probability and impact matrix. And then the impact as a negative impact for threats, or a positive impact for opportunities, and those are multiplied together to give us the outcome.Īs you can see, we’ve got the high impact and high probability up in the top right, and low impact and low probability in the bottom left.

So we’ve got very low and very high, or 0.1 to 0.9. As you can see, we’ve got the probability on one side, and its actually given descriptive terms and numbers just so you can see the difference. Here’s an example of a probability of impact Matrix. The reason we use numbers is if numbers are used they can be multiplied to give a probability impact score for each risk, and that’s a great way to prioritize those risks. Or more common is numeric values, where a 5 might be a high, and a 1 might be a low for example. And things like descriptive terms could be used if you want to – so it might have a “high impact”, medium, low, very low.

So first of all, both opportunities and threats are rated, so we do want to find the strengths and our weaknesses of our project. So is it a high priority? Is there a high probability and a high impact? Then we probably want to be focusing on that, and the low ones we can maybe leave for later. And what’s the impact if that actually happens? Is it high, is it low? By giving it a rating, it allows project risks to be allocated into priority groups. We ask, “What is the probability of it happening?” Maybe it’s 70 percent for example. It’s a grid for mapping the probability of each risk occurrence, and its impact on your project objectives if that risk occurs. What is a Probability and Impact Matrix? Well, it’s part of your qualitative risk analysis. – See All Project Management Key Concepts –

Risk probability and impact matrix