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Risk Assessment Matrix: What It Is and How to Use It

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The average project is fraught with risk. Not only are there legal risks, like regulatory and contractual responsibilities, but there are financial concerns, technical and technological risks, external risks, and many more. If ignored, such risks could spell disaster for even the most skilled project managers . When properly analyzed and addressed by a veteran PM, however, many of these risks are easily mitigated. One way to do it is by using a risk assessment matrix.

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What is a Risk Assessment Matrix?

A risk assessment matrix is a chart used for prioritizing and tracking project risks. It’s a visual aid that provides a complete overview of the risks involved and the likelihood that each one will occur, and it is vital when creating a risk management strategy.

Generally speaking, most projects present several different types of risk. Some common risks include:

  • Operational risks: This includes risks that result from poor project implementation. Depending on the project, this could include issues with production, resource allocation, procurement, distribution, and more.
  • Technological risks: Risks that affect software and hardware systems include cyber attacks, device failures, virus infections, and any sort of technological failure.
  • Performance risks: These risks describe how likely—or unlikely—it is that the project will create the desired results.
  • Scheduling risks: Anything that has the potential to disrupt the project timeline is considered a scheduling risk.
  • Cost risks: Generally the result of poor project planning or scope creep, these risks either increase project budgets or result in unfinished or incomplete projects.
  • Governance risks: These are risks that could affect the company’s reputation, their community, or their ethics, and they generally fall on the shoulders of executive board members and senior managerial staff.
  • Scope creep risks: Do your project requirements often expand beyond the initial project scope? If so, you’re probably experiencing scope creep. While it can be controlled, failure to do so could result in complete failure of the project at hand.
  • Legal risks: Most projects contain several legal risks, such as contractual and regulatory requirements, that must be followed at all times.

While other risks may exist, specific risks are often grouped into one of four categories or buckets. These buckets include:

  • Project management risks: These risks involve your project team members and how they could affect the overall success of the project at hand. Examples include project planning, communications, and project controls.
  • Organizational risks: Organizational risks refer to your ability to allocate resources, prioritize tasks, and make key decisions regarding the project.
  • Technical risks: This category includes technological risks such as issues with software or hardware. It also includes risks involved in requirements gathering, process documentation, and performance analysis.
  • External risks: Risks that are beyond the control of the PM or project team members are considered external risks. This could include weather-related risks, governmental risks, regulatory risks, societal risks, supplier-related risks, and others.

Depending on the project and the exact risks involved, some additional risk categories may need to be established.

How to Create a Risk Assessment Matrix

When creating your risk assessment matrix, the very first step involves identifying and isolating any issues that pose a threat to overall project success. For best results, review the above lists and work on identifying risks with your team. Including all project stakeholders in this manner will ensure that all of the potential threats are fully uncovered and identified.

Before the identified risks can be added to your risk assessment matrix, you’ll need to establish your risk criteria. This essentially means organizing all risks according to their likelihood and severity. However, the criteria you ultimately use depends on the exact sizing of your risk matrix.

Creating a 5×5 Risk Matrix

One of the most common examples of a risk assessment matrix is the 5×5 risk matrix. In this case, you’ll use five different likelihood ratings. From least likely to most likely, these include:

Additionally, each likelihood rating corresponds with a numerical value. Risks that are “improbable” are given a value of one, while those identified to be “frequent” are given the maximum value of five. These likelihood ratings comprise the left side of the risk matrix.

Next, you’ll establish five different severity ratings. From least severe to most severe, these include:

  • Catastrophic

Severity ratings are listed across the top of the matrix. Similar to likelihood ratings, each severity rating is assigned with a numerical equivalent. The least severe “negligible” rating, for example, has a numerical value of one. On the other end of the scale, the “catastrophic” rating has a numerical value of five.

A 5×5 risk matrix then results in one of four different risk impact ratings: low, medium, high, or extreme. Those with the lowest likelihood to occur and the lowest severity rating will be on the low end of the matrix, while risks with the highest likelihood and highest severity will appear on the extreme end of the matrix.

Creating a 4×4 Risk Matrix

The 4×4 risk matrix is very similar to the 5×5 risk matrix, except instead of resulting in a grid that contains 25 squares (5 x 5), it creates a grid with 16 (4 x 4) total squares. While it is functionally identical to the 5×5 risk matrix, the 4×4 matrix has only four different ratings of risk likelihood and severity. From least likely to most likely, the likelihood ratings in a 4×4 risk matrix are:

Conversely, the four severity ratings are:

Although a 4×4 risk matrix has fewer grid squares than a 5×5 risk matrix, there are still four different risk impact ratings, which are low, medium, high, and extreme.

Creating a 3×3 Risk Matrix

Best suited for smaller projects, the 3×3 risk matrix only comprises a total of nine grid squares. Likelihood ratings for a 3×3 risk matrix include:

Listed in order from least severe to most severe, the severity ratings for a 3×3 risk matrix include:

Unlike the 5×5 and 4×4 risk matrices, the 3×3 risk matrix only produces three different risk impact ratings: low, medium, and high.

How to Use Your Risk Assessment Matrix

Now that you’ve brainstormed potential project risks and created your risk matrix, it’s time to begin measuring each risk according to the ratings indicated above. Remember that many of the risks and their respective ratings are highly subjective. Not only do they vary between industries and professions, but they can also vary between projects.

Using a 5×5 Risk Matrix

One of the most common sizes used, most project managers agree that the 5×5 risk matrix offers the perfect mixture of risk detail and clarity. However, it is generally reserved for larger projects. Most small projects can be completed using a 4×4 or 3×3 risk matrix.

When using a risk matrix, regardless of size, it’s important to remember the numerical values assigned to each likelihood and severity rating. This makes it easy to calculate a numerical value for each one of the project’s risks as you simply need to multiply the likelihood that it is to occur by the severity of its impact.

For example, a risk that would have a negligible impact on the project’s success and is considered “improbable” or unlikely to happen would have a risk impact rating of 1 (1 x 1). Any risk that would have a moderate impact and might happen “occasionally” results in an impact rating of 9 (3 x 3). On the highest end of the scale, a risk that would have a “catastrophic” impact on the project and occurs “frequently” ends up with a risk impact rating of 25 (5 x 5).

After you’ve determined the numerical risk impact rating for any given risk, compare it to the list below to determine whether it poses a low, medium, high, or extreme threat to project success.

  • Medium: 4–9
  • High: 10–16
  • Extreme: 15–25

You will notice a bit of crossover between the “high” and “extreme” impact ratings. This is because a risk with “critical” impact (4) that is considered “probable” (4) to happen will have an impact rating of 16 (high), but a risk with “catastrophic” (5) consequences that has a “moderate” (3) chance of occurring will have an impact rating of 15 (extreme).

Using a 4×4 Risk Matrix

Another common sizing, the 4×4 risk matrix is for large projects that don’t require the level of granular detail that the 5×5 risk matrix provides. Depending on its usage, however, the 4×4 risk matrix could result in too many risks falling into a “medium” impact rating. In cases like this, it’s rather easy for risks to be mislabeled, and as such, some mitigation strategies might fall to the wayside.

Other than that, the 4×4 risk matrix functions identically to the 5×5 risk matrix. Once a risk has been placed onto the matrix, its risk impact rating is determined by multiplying the likelihood and severity ratings. Then compare the final sum to the list below to separate risks into the “low,” “medium,” “high,” and “extreme” categories.

  • Medium: 3–4
  • Extreme: 12–16

Using a 3×3 Risk Matrix

Many smaller projects can be completed with a 3×3 risk matrix. While it lacks the specificity of the 5×5 or 4×4 risk matrices, its basic design and straightforward process make it a great solution for novice PMs.

But the biggest drawback of the 3×3 risk matrix also lies in its simplicity. With only three likelihood and severity ratings, it can be difficult to accurately rank certain risks. That’s why large or complex projects often need a 4×4 or 5×5 risk matrix.

After you’ve multiplied the numerical values of the likelihood and severity ratings for each risk, compare the result against the list below in order to further categorize each project risk.

Risk Assessment Matrix Templates

There are a plethora of risk assessment matrix templates available online. While some of these are geared toward one particular industry or toward a specific project type, they all provide a great starting point for novice PMs and project teams who are trying to get started with the risk assessment matrix.

Someka Risk Assessment Matrix Template

Created by the team at Someka, this risk assessment matrix template is available in two different formats: Microsoft Excel and Google Sheets. Referred to as a Hazard Identification & Risk Assessment (HIRA), the document is ideal for tracking cyber threats, internal corruption, and other issues. It consists of three separate parts:

  • Risk report: Provides a systematic examination of workplace risks, how to assess personal injuries on the job, and the likelihood of reducing risks.
  • Risk list: This section lets the user list specific hazards, including the people who are at risk, the person responsible for overseeing the risk, and any recommended actions.
  • Risk matrix: The last section comprises a 4×4 risk matrix for tracking the likelihood and severity of personal injuries in the workplace.

Smartsheet Risk Assessment Matrix Template

The development team at Smartsheet offers a variety of free risk matrix templates that are compatible with Smartsheet, Microsoft Excel, Microsoft Word, and Adobe software (PDF). Moreover, they provide risk matrices in several different sizes including 3×3, 3×4, and 5×5. They also provide more insight into the usage and application of risk assessment matrices in general.

TeamGantt Risk Assessment Matrix Template

Users who need a highly customizable, 3×3 risk assessment matrix template can find a basic version from TeamGantt. Available exclusively for Microsoft Excel, their simplified chart includes three different elements:

  • Risk Assessment Matrix : This 3×3 risk matrix is simple to use and easy to customize as needed.
  • Risk Assessment List : A pre-formatted list of all potential risks, the areas that are affected by these risks, the severity of each risk, the likelihood of each risk, the total risk impact rating, and any recommended actions
  • Lists : A master list with all of the available severity, likelihood, and impact ratings

Risk Assessment Matrix FAQs

While risk assessment matrices tend to be highly accessible and straightforward, some users might have some remaining questions surrounding their usage or application.

What is the significance of risk severity levels in the matrix?

Risk severity levels provide a quantifiable measurement of the threat posed by any given risk. In a 5×5 risk matrix, there are five different severity levels (negligible, marginal, moderate, critical, and catastrophic). A 4×4 risk matrix has four different severity levels (negligible, marginal, critical, catastrophic), while a 3×3 risk matrix has three different severity levels (marginal, moderate, and critical).

Classifying risks in this manner makes it easy to see which risks need to be addressed immediately and which ones can be delayed to a later date (if at all).

How often should a risk assessment matrix be updated?

While risk matrices should be updated over the course of time, there is no right or wrong answer regarding the frequency of these updates. It is worth noting, however, that regular updates give you the opportunity to remove any resolved risks and add any new risks that have been uncovered since the project began. Moreover, updating the risk matrix at regular intervals is a great way to give novice PMs and new project teammates more experience with the entire process.

Can a risk assessment matrix be used in different industries?

Absolutely! Risk matrices aren’t limited to one specific industry, field, or profession. In fact, they are often customized in order to meet the user’s exact needs. Feel free to customize your risk assessment matrix by adding more risk categories, modifying the scoring criteria, or by using a different sized matrix altogether. The most important thing to remember here is that the risk matrix needs to work for you and your team. If it doesn’t or if it’s confusing to your project teammates, then it’s time to make a change.

Is risk assessment matrix sizing really important?

Yes and no. Generally speaking, smaller risk matrices work better for smaller projects. However, depending on the size and scope of the project, any matrix size should do. Most professionals don’t recommend going any larger than 5×5, however, as this often results in more complexity than it’s worth. For best results, stick to a 3×3, 4×4, or 5×5 risk assessment matrix.

Making the Most of Your Risk Assessment Matrix

In the hands of a skilled PM, a risk assessment matrix helps clarify risks and forecast their potential impact on the project as a whole. Most risk management strategies begin by prioritizing each risk on the matrix and allocating the resources needed to tackle the most impactful ones. Since it is virtually impossible to overcome every single risk, expert PMs need to know how to pick their battles and mitigate those that pose the most threat to overall project success.

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  • Risk matrix template: How to assess ris ...

Risk matrix template: How to assess risk for project success (with examples)

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A risk matrix analyzes project risks based on likelihood and severity. Once you map your risks, you can calculate overall impact and prioritize risks accordingly. In this piece, you’ll learn how to create a risk matrix template and how to use the information from this analysis tool to develop a comprehensive risk management plan.

Risks are a part of any project, and there’s no surefire way to know which ones will occur and when. Sometimes, you'll get through an entire project without experiencing a single hiccup. Other times, you’ll feel like all the odds are against you. Without the help of a crystal ball, the only way to prevent project risks is to proactively prepare for them. 

A risk matrix helps you analyze risk by assigning each event as high, medium, or low impact on a scale of one through 25. Once you assess the severity and likelihood of each risk, you’ll prioritize your risks and prepare for them accordingly. In this article, we’ll explain how to create a risk matrix template and offer helpful tools for turning your results into action.

What is a risk matrix in project management?

Types of risks.

As part of the process, you’ll need to brainstorm a list of risks to chart in your risk matrix. The risks you may face will likely fall into these categories:

Strategic risk : Strategic risks involve performance or decision errors, such as choosing the wrong vendor or software for a project.

Operational risk : Operational risks are process errors or procedural mistakes, like poor planning or a lack of communication among teams.

Financial risk : Financial risk can involve various events that cause a loss of company profit, including market changes, lawsuits, or competitors.

Technical risk: Technical risk may include anything related to company technology, such as a security breach, power outage, loss of internet, or damage to property.

External risk: External risks are out of your control, like floods, fires, natural disasters, or pandemics. 

There are other risk categories to consider depending on your work industry. For example, if you have government clients, then you also want to brainstorm legal risks. If your company sells a physical product, you may have to think about manufacturing risks.

How to create a risk matrix template

When creating your risk matrix template, you’ll first identify your scale of severity, which you’ll place in the columns of your matrix. ​​The scale of severity measures how severe the consequences will be for each risk. In a five-by-five matrix, there are five levels in your scale of severity. 

Negligible (1): The risk will have little consequences if it occurs.

Minor (2): The consequences of the risk will be easy to manage.

Moderate (3): The consequences of the risk will take time to mitigate.

Major (4): The consequences of this risk will be significant and may cause long-term damage.

Catastrophic (5): The consequences of this risk will be detrimental and may be hard to recover from.

You’ll then identify your scale of likelihood, which you’ll place in the rows of your risk matrix template. The scale of likelihood identifies the probability of each risk occurring.  

Very likely (5): You can be pretty sure this risk will occur at some point in time.

Probable (4): There’s a good chance this risk will occur.

Possible (3): This risk could happen, but it might not. This risk has split odds.

Not likely (2): There’s a good chance this risk won’t occur.

Very unlikely (1): It’s a long shot that this risk will occur.

When you place a risk in your matrix based on its likelihood and severity, you’ll find the level of risk impact. The risk impact is both color-coded from green to red and rated on a one through 25 scale. 

Low (1-6): Low-risk events likely won’t happen, and if they do, they won’t cause significant consequences for your project or company. You can label these as low priority in your risk management plan .

Medium (7-12): Medium-risk events are a nuisance and can cause project hiccups, but if you take action during project planning to prevent and mitigate these risks, you’ll set yourself up for project success. You shouldn’t ignore these risks, but they also don’t need to be a top priority.

High (13-25): High-risk events can derail your project if you don’t keep them top of mind during project planning. Because these risks are likely to happen and have serious consequences, these are most important in your risk management plan.

[inline illustration] risk matrix criteria (infographic)

 You don’t have to stick to the labels above for your risk matrix template if they don’t feel right for your company or project. You can customize the size and terminology of your matrix to your needs.

How to use a risk matrix

Once you’ve created a risk matrix, you can use it as a comprehensive analysis tool. The best part about a risk matrix template is that you don’t need to change it for every project. Once you have one, you can reuse it and share it with others. 

[inline illustration] 5 steps to use a risk matrix (infographic)

1. Identify project risks

You’ll need a list of potential risks to make use of your risk matrix. In this step, you’ll determine what risks may affect the specific project you’re working on. 

To come up with relevant risks for your project, you’ll need to understand your project scope and objectives. This includes the project’s:

Constraints

Using your project scope as a guide, think of risky situations that might affect your project. If you’re not sure where to start, try brainstorming techniques like mind mapping or starbursting to list as many risks as you can under each risk type. 

2. Determine severity of risks

When you created your risk matrix, you defined the criteria for your risk severity and likelihood. Now that you have a list of project risks, categorize them using the matrix criteria. Start with the scale of severity and go through each risk you’ve listed. Consider the following questions:

What is the most negative outcome that could come from this risk?

What are the worst damages that could occur from this risk?

How hard will it be to recover from this risk?

Which of the five severity levels most closely matches this risk?

You may not always have the perspective you need to know how severe the consequences of a risk are. In that case, work with other project stakeholders to determine the potential risk impact.

3. Identify likelihood of risks

Once you’ve defined the severity of each risk, you’ve completed half of the risk analysis equation. Next, identify the likelihood of each risk. To do this, consider the following questions:

Has this risk occurred before and, if so, how often?

Are there risks similar to this one that have occurred?

Can this risk occur, and if so, how likely is it to occur?

Team collaboration is also crucial in this step because you may not have a good idea of similar risks that have occurred in past projects. Make sure to reference past projects and analyze the probability of each risk with your team in order to create a more accurate mitigation plan.

4. Calculate risk impact

The last part of your risk analysis equation is to calculate risk impact. The equation you’ll use is:

Likelihood x severity = risk impact  

Place each risk in your matrix based on its likelihood and severity, then multiply the numbers in the row and column where it lands to find the level of risk impact. For example, if you think the risk of a data breach is of major severity (4) and probable likelihood (4), you’d multiply four by four to get a risk impact of 16. This is considered a high-risk impact. 

5. Prioritize risks and take action

You should now have a risk impact level on a scale of 1–25 for each risk you’ve identified. With these number values, it’s easier to determine which risks are of top priority. When you have risks with the same risk impact score, it will be up to you and your team to determine which risk to prioritize. Risks with equal risk impact may require equal attention as you create your action plan. 

Your risk response plan should include steps to prevent risk and ways to mitigate risk if unfortunate events occur. Because so much goes into project planning, the best strategy when tackling risks may be to divide and conquer.

Risk assessment matrix template

The size of your risk matrix template determines how closely you can analyze your project risks. A larger risk matrix template offers more room on the risk impact spectrum, while a smaller risk matrix template keeps your risk impact rating simpler and less subjective. 

Each square in your matrix represents a risk level of likelihood and severity, so you shouldn’t make your risk matrix smaller than three squares in length and width.

A five-by-five risk matrix is ideal so you can further analyze each risk. Once you chart your risks along your finished risk matrix template, this matrix creates a larger color spectrum to see the impact of each risk as high, medium, or low. 

The example below shows a five by five risk matrix template.

[inline illustration] Risk matrix (example)

You can download a free risk matrix template using the link below. Use this template to chart your project risks and determine their overall level of risk impact.

Pair your risk matrix template with a work management tool

You can use the same risk matrix template when measuring risk across multiple projects. However, it’s important to remember that the risks you face will evolve. The environment changes, technology becomes smarter, and the workplace grows. Every project faces unique risks, and you must reevaluate these risks year after year.

When you pair your risk matrix template with work management software , you can use past data to inform current processes. Asana helps you share the results of your risk matrix with stakeholders so you can collaborate on a risk management plan. Once you have a solid plan in place, you can monitor your team in real-time as they take action.

Download Free, Customizable Risk Matrix Templates

By Andy Marker | March 15, 2017

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A risk matrix helps you prioritize project or business risks by ranking the potential impact and likelihood of each risk. We’ve researched and compiled the top risk matrix templates to help you identify and mitigate risks.

Included on this page, you’ll find free risk matrix templates , and learn about the utility of risk matrices and the importance of risk assessments in healthcare organizations . 

Free Risk Matrix Templates

Risk matrices, also called risk severity matrices , can help you determine the priority of risks. Once you determine the severity and likelihood of your risks, list them in the order to be addressed. Color coding helps visualize risk rankings, and you can also designate zones in your matrix as generally acceptable (GA), as low as reasonably possible (ALARP), and generally unacceptable (GU) to create an at-a-glance view of which risks to prioritize. Read more about these zones below. 

3x3 Risk Matrix Template

3x3 Risk Matrix

Download 3x3 Risk Matrix Template

Excel | Word | PDF

This 3x3 risk matrix template is ideal for teams and organizations that prefer simplicity. The template provides three levels to code both the severity and likelihood of each risk: low, medium, and high (which are assigned values of one, two, and three, respectively). After determining the values for the severity and likelihood, use the grid to determine the risks that need to be addressed first.

3x4 Risk Matrix Template

Risk Matrix

Download 3x4 Risk Assessment Matrix Template Below

Excel | Word | PDF | Smartsheet

This 3x4 risk matrix template uses non-numeric scales for likelihood and severity; after selecting the options for each parameter, use the values in the matrix to determine the level of severity for each risk.

5x5 Risk Matrix Template

5x5 Risk Matrix

Download 5x5 Risk Matrix Template

The 5x5 matrix template provides additional scaling options; this template is ideal for organizations that need more granular insight into each risk. After determining the values for severity and likelihood, use the grid to determine the priority of the risks.

Risk Management Matrix Template

Risk Management Matrix Template

Download Risk Management Matrix Template

Excel | Word | PDF  | Smartsheet

Use this risk management matrix to identify risks and determine when they require mitigation. This template allows you to rate risk impact and likelihood both before and after mitigation, and note the actions that will be taken to manage the impact of risks. 

Risk Control Matrix

risk matrix assignment

Download Risk Control Matrix Template

This type of risk matrix is helpful for organizations or projects that regularly encounter a high degree of risk. It reflects risks and their impact, as well as the automated and manual controls available to help limit the resulting losses. You can use this risk control matrix later to create a risk response plan, and can customize it to fit the needs of your project or organization.

IT Risk Assessment Matrix Template

IT Risk Assessment Matrix Template

Download Risk Response Matrix Template

IT involves a variety of unique risks and in today’s data-driven environment, the consequences are often severe. Threats to data, systems, and networks originate from a variety of sources, ranging from natural disasters to hardware failures. However, in IT, many risks are human-related, such as external threats (hackers or terrorists), insider threats (ex-employees who have login credentials), or trusted insiders (current employees who gain improper access).

This IT risk analysis matrix allows you to plan responses to the most catastrophic risks, contain moderate risks, and monitor less severe ones. Factor in data and system requirements, the time it will take to recover data/system functioning, and the minimum staff and equipment needed to conduct business in the meantime.

Business Risk Assessment Matrix Template

Business Risk Assessment Matrix Template

This risk matrix example shows you how to anticipate risks your company may experience, so you can prepare to address them before they impact your bottom line. 

Use this business risk assessment matrix to list potential risks, the assets, departments, or business entities that will be affected, the likelihood of each risk, available prevention or mitigation actions, and more.

Depending on your business, the impact rating may relate to financial loss, operational difficulties, a drop in customers, or some other measure.

For additional information and resources on how to assess risk pertaining to third-parties your organization does business with, visit " Vendor Assessment and Evaluation Simplified ," and " Free Vendor Risk Assessment Templates ."

Risk Response Matrix Template

Risk Response Matrix Template

In addition to analyzing risks themselves, this risk response matrix allows you to outline a plan for respondse. With this risk matrix template for Excel, you can list risks, rate their likelihood and impact, and note the response to each (e.g., “reduce” or “eliminate”). You can also describe the contingency plan for responding to the risk, the event that will trigger the response, and the party that will handle the response. 

This risk matrix is especially useful for high-risk industries, organizations, or projects. It offers an at-a-glance view of not only the impact of risks, but also the triggers to look for and the proper plan for addressing risks that occur.

Construction Risk Assessment Matrix Template

Construction Risk Assessment Matrix Template

There are many different types of risks common to construction projects , including on-the-job risks (worker injury or accident), financial risks, project risks, natural risks, and competitive risks.

By using a construction risk assessment matrix, you can anticipate common risks, and gauge the impact they will have on your project. You can also note whether the contractor, owner, or designer is responsible for addressing them. With this risk assessment matrix example, you can stay within schedule and budget, and ultimately protect your profit margins.

Project Risk Matrix Template

Project Risk Matrix Template

Excel  | Word | PDF

Use this risk assessment matrix to conduct a qualitative risk analysis of risk probability, and gauge how severe the impact of each risk would be on project scope, schedule, budget, and completion. This risk matrix template allows you to rate risks both before and after a response, along with events that could trigger the risk, the person or entity in charge of responding, and the response plan.

What Is a Risk Matrix?

A risk matrix is a chart that plots the severity of an event occurring on one axis, and the probability of it occurring on the other. You can also format the matrix as a table, where the risk likelihood and impact are columns, and the risks are listed in rows. By visualizing existing and potential risks in this way, you can assess their impact, and also identify which ones are highest-priority. From there, you can create a plan for responding to the risks that need the most attention. 

A risk matrix chart is a simple snapshot of the information found in risk assessment forms, and is often part of the risk management process. These forms are more complex, and involve identifying risks, gathering background data, calculating their likelihood and severity, and outlining risk prevention and management strategies. 

Risk management is the process by which organizations discover, analyze, and address risk to meet goals, keep projects on track, and stick to budgets and timelines. It involves five stages: planning, identification, analysis, response, and monitoring/control. Creating a risk matrix is often one of the first steps in the risk management process, and frequently occurs in the analysis phase (after the risk assessment forms have been created).

How to Use a Risk Matrix Template

Also known as a risk management matrix, risk rating matrix,  or risk analysis matrix , a risk matrix template focuses on two aspects:

  • Severity: The impact of a risk and the negative consequences that would result.
  • Likelihood : The probability of the risk occurring. 

To place a risk in the risk matrix, assign a rating to its severity and likelihood. Then plot it in the appropriate position in your chart, or denote the rating in your table. The typical classifications used are as follows:

  • Insignificant: Risks that bring no real negative consequences, or pose no significant threat to the organization or project.
  • Minor: Risks that have a small potential for negative consequences, but will not significantly impact overall success.
  • Moderate: Risks that could potentially bring negative consequences, posing a moderate threat to the project or organization.
  • Critical: Risks with substantial negative consequences that will seriously impact the success of the organization or project.
  • Catastrophic: Risks with extreme negative consequences that could cause the entire project to fail or severely impact daily operations of the organization. These are the highest-priority risks to address.

Likelihood:

  • Unlikely: Extremely rare risks, with almost no probability of occurring.
  • Seldom: Risks that are relatively uncommon, but have a small chance of manifesting. 
  • Occasional: Risks that are more typical, with about a 50/50 chance of taking place.
  • Likely: Risks that are highly likely to occur.
  • Definite: Risks that are almost certain to manifest. Address these risks first. 

Classifying and Prioritizing Risk

After you’ve placed each risk in the matrix, you can give it an overall risk ranking. Risks that have severe negative consequences and are highly likely to occur receive the highest rank; risks with both low impact and low likelihood receive the lowest rank. Risk rankings combine impact and likelihood ratings to help you identify which risks pose the greatest overall threats (and therefore are the top priority to address). 

Some organizations use a numeric scale to assign more specific risk rankings. However, most rankings fall into a few broad categories, which are often color-coded:

  • Low: The consequences of the risk are minor, and it is unlikely to occur. These types of risks are generally ignored, and often color-coded green.
  • Medium: Somewhat likely to occur, these risks come with slightly more serious consequences. If possible, take steps to prevent medium risks from occurring, but remember that they are not high-priority and should not significantly affect organization or project success. These risks are often color-coded yellow.
  • High: These are serious risks that both have significant consequences, and are likely to occur. Prioritize and respond to these risks in the near term. They are often color-coded orange.
  • Extreme: Catastrophic risks that have severe consequences and are highly likely to occur. Extreme risks are the highest priority. You should respond to them immediately, as they can threaten the success of the organization or project. They are often color-coded red.

Once you’ve ranked your risks, you can make a risk response plan to prevent or address those that are “high” or “extreme.” You may not need to respond to risks ranked “low” or “medium” before work begins.  

Risk Template Matrix Zones

Many organizations get an even clearer picture of risk by dividing the matrices into zones:

  • Generally Acceptable (GA): In the area of the chart ranked “low,” risks have little impact and/or are unlikely to occur. Risks in this region don’t pose an immediate threat to the project or organization, and some can even be ignored. 
  • As Low As Reasonably Possible (ALARP): This is a zone of acceptable risk, encompassing the “low” and “medium” ranking areas. Risks falling within this region of the matrix are tolerable or not significantly damaging; work can proceed without addressing these risks being immediately. 
  • Generally Unacceptable (GU): This is the area of the chart where risk is “high” or “extreme.” Risks in this region are quite damaging, highly likely to occur, and would threaten the project or organization. They are highest-priority, and you must address them immediately. 

Validation and Risk Response

To ensure you’ve chosen the right risk matrix chart and completed it correctly, validate it with a real-world scenario. After selecting your template, fill it in with examples of risks your organization encounters. After you’ve used the matrix to quantify the severity and likelihood of risks, it’s up to your team to come up with a risk response plan for those ranked “GU.” 

Depending on your industry or organization size, you may have additional resources for risk assessment and response. For example, the U.S. Occupational Safety and Health Administration (OSHA) has specific matrices workers can use when responding to natural disasters: The Hazard Exposure and Risk Assessment Matrix helps workers and employers assess risks and operate more effectively in areas impacted by hurricanes.

Of course, a risk rating matrix is simply a tool to help guide decision-making. The risk management team should always carefully analyze both the matrices and the risks themselves before deciding how to prevent, mitigate, or respond to a current or potential risk. Risk matrices are commonly used in project management to examine how risks might affect project scope, schedule, and cost. But they’re also used in industries from construction to IT. Our free risk matrix examples contain a variety of types for different industries, so you can find one that best fits your needs. 

The Importance of Risk Assessments in Healthcare Organizations

There are many potential threats affecting healthcare organizations, such as clinical testing errors, hospital facilities issues, security breaches of protected health information (PHI), and more. Healthcare organizations are under strict regulations when it comes to risk and compliance, meaning establishing a risk assessment and determining where those risks exist are extremely important for the business, both legally and functionally.

Creating a plan to handle risk can help to identify the most severe threats, assess their likelihood, and determine how to mitigate them. In addition, risk assessments can identify the location of all PHI and establish a targeted risk response to safeguard confidential information.

Healthcare risk assessments must be comprehensive, accessible across authorized members of the organization, and sufficient in the way it identifies and addresses all potential threats to processes and information. To ensure that all healthcare data, information, and procedures are effectively audited for possible risks, you need a tool that enables you to quickly identify, mitigate, and prevent risks from coming to fruition, while also offering real-time visibility into all potential threats.

Smartsheet is a work execution platform that empowers healthcare companies to view and update risks across the organization with real-time dashboards, so you can make the best decisions at the right time. Highlight identified risks, update likelihood and severity, and oversee how they are being addressed to keep your team on the same page, all while ensuring utmost security and protection of PHI. Set sharing settings within dashboards to ensure that only authorized users have access to confidential information, so your organization remains compliant with HIPAA regulations.

Interested in learning more about how Smartsheet can help you accurately and securely document healthcare processes and maximize your efforts? Discover Smartsheet for Healthcare .

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Risk Assessment Matrix: Definition, Examples, and Templates

Fahad Usmani, PMP

November 28, 2022

risk assessment matrix

A risk assessment matrix is a tool for assessing and prioritizing risks in risk management .

This blog post will discuss the risk assessment matrix, how to create a risk assessment matrix, and provide examples and a template you can use to create your risk assessment matrix.

What is a Risk Assessment Matrix?

Project managers evaluate and prioritize risks using a risk assessment matrix . Many experts refer to this matrix as either a probability and severity risk matrix or a risk matrix.

The matrix allows project managers to plot the severity of the consequences and the likelihood of the event occurring from low to high. This information helps rank the risk.

Creating a risk assessment matrix can be done in various ways; however, the most important things to keep in mind are that it should be concise, simple, and adapted to the project’s particular circumstances.

Risk ranking helps project managers separate high and low-rank risks. They can develop a risk management plan for high-ranked risks and keep low-level risks on a watchlist. Prioritizing helps the project management team focus on high-priority risks and saves resources in investing in low-priority risks.

The higher the severity and likelihood of an event, the greater the risk. Many factors influence the decision of what is high-risk. For example, if the consequences of an event are not severe, it may be considered a low-ranking risk.

How Does a Risk Matrix Work?

Risk assessment is the probability of an event multiplied by its impact. You can break probability and impact levels into verbal and numerical scales.

Severity in risk assessment

Risks can be grouped into three zones:

  • The High Risk (Red Color) – Unacceptable
  • Moderate Risk (Yellow Color) – May or May Not Be Acceptable
  • The Low Risk (Green Color) – Considered Acceptable

Determining whether a risk is acceptable often comes from a cost/benefit calculation . For instance, it is difficult to justify paying millions of dollars to prevent an injury caused by ergonomics, yet investing the same millions of dollars in preventing a chemical explosion might be worth it.

Benefits of a Risk Assessment Matrix

The benefits of the risk assessment matrix include the following:

  • It Prioritizes Risks: Project managers can prioritize and focus on high-ranking risks by assessing their probability and impact.
  • It Improves Communication: A risk assessment matrix improves communication between different departments and stakeholders by providing a common language for discussing risks.
  • It Facilitates Decision Making: The matrix helps develop risk response plans.
  • It Improves Risk Understanding: The risk assessment matrix creation process helps the project team understand the risks and their interrelationships.
  • It Helps Develop Budgets: Project managers can calculate contingency reserves and plan the budget after identifying and assessing the risks.

How To Create A Risk Assessment Matrix

The steps to create a risk assessment matrix are as follows: 

Risk Identification

The first step in creating a risk assessment matrix is risk identification. To acquire a range of perspectives, identify as many risks as possible.

Some organizations have risk checklists based on past project experiences. These checklists help identify risks quickly for new projects. 

Afterward, project managers can find more risks by brainstorming with the team, reviewing project documents , and talking to stakeholders .

The different types of risks include:

  • Internal Risks: These risks come from within the company, and the project team has some control over them. For example, an ineffective team member, unrealistic deadlines, or a lack of resources.
  • External Risks: These risks come from outside the company, and the project team has no control over them. For example, natural disasters, supplier problems, or changes in the market.
  • Strategic Risks: These risks come from the organization’s strategy. For example, a new product launch might fail, or a competitor might release a similar product.
  • Operational Risks: These risks are caused by day-to-day operations. For example, equipment breakdown, sick leave, mistakes, process errors, etc.
  • Financial Risks: These risks come from the organization’s finances. For example, a decrease in sales, an increase in costs, or a change in interest rates.

Risk Analysis

The project team analyzes the likelihood of each risk after identifying those risks. They need to conduct a risk assessment to determine how likely they are to cause damage.

There are several ways to perform a risk analysis. One popular method is a SWOT analysis, which stands for Strengths, Weaknesses, Opportunities, and Threats. Another common method is PESTLE analysis , which stands for Political, Economic, Social, Technological, Legal, and Environmental factors.

Assessing Risk Impact

After analyzing the risks for their probabilities, the project management team will assess their impact severity and the potential loss incurred if the risk occurs.

There are a lot of different approaches to determining the seriousness of the possibility and the impact. One of the more prevalent approaches is using a scale that ranges from one to five, with one denoting the smallest probability and five denoting the greatest probability.

In addition, the impact intensity is graded on a scale from one to five, with one being the least significant impact and five representing the most significant impact. After estimating the severity of probability and impact of the risk, team members multiply them to get the risk ranking.

Risk Prioritization

The last step in creating a risk assessment matrix is prioritizing the risks. This is done by ranking them from highest to lowest.

Risks can be divided into four levels: high-priority risks, major risks, moderate risks, and minor risks.

  • High Priority Risks: These risks have a high probability of occurring and could significantly impact the project.
  • Major Risks: These risks have a moderate probability of occurring and could impact the project.
  • Moderate Risks: These risks have a low probability of occurring and could moderately impact the project.
  • Minor Risks: These risks have a very low probability and impact and a minor effect on the project. These risks are mentioned in the watchlist for monitoring.

The project manager will develop risk response plans for all risks except those on the watchlist.

How to Categorize Risks in a Risk Assessment Matrix

You can define risk assessment matrixes differently, but the most common is plotting risks on the x-axis and probabilities on the other.

This results in a matrix with four quadrants, each representing a distinct risk level. The dangers located in the upper left quadrant have a high chance as well as high severity, and they are considered to be the most severe.

The dangers located in the bottom right quadrant have a low likelihood and severity, and they are the hazards that are regarded as the least serious.

How to Use the Result of a Risk Matrix

You use the output of the risk matrix to develop a risk management plan, more specifically, a risk response plan.

You have a list of prioritized risks. Therefore, you will begin by formulating a response strategy for high-level risks and move on to medium-level threats.

You won’t bother developing a reaction plan for low-level risks; instead, you’ll keep track of them on a watch list and continue monitoring them until the project is through.

You will work on developing a risk response strategy if the severity of any low-risk situation increases from a low level to a high level.

In addition, you can maintain a high-priority risk on a watchlist even if its severity level decreases and it transitions into a low-priority risk if the situation warrants it.

Example Of a Risk Assessment Matrix

Here is an example of a simple risk assessment matrix to evaluate the risks.

The matrix shows the risk associated with returning to work during the pandemic.

Risk: Flawed policies to prevent the spread of the virus to employees and visitors.

What Can Go Wrong?

  • Employees feel uncomfortable wearing masks for a long period and remove them while talking with colleagues. The virus spreads throughout the team.
  • The customer refuses to wear a mask and is asked to leave the premises.
  • Employees and customers not staying six feet apart.

Mitigation(s)

  • Apply penalties for not wearing masks. 
  • Assign places where employees can remove the masks, finish breakfast, lunch, etc.
  • Keeping signs on the front door that refuse people entry without a mask. 
  • Placing dots six feet apart to instruct people on where to stand in line and prevent crowding.

Risk Assessment Matrix Template

Let’s review risk assessment matrix templates.

The risk categories range from low to high, and probability ranges from highly likely to very unlikely. The risk rating can be seen by finding the intersection of both criteria.

The following example shows the risk assessment matrix template 4X4.

Risk Assessment Matrix Template

Limitations of Risk Matrix

A risk matrix is useful in risk management but has some limitations. These limitations are:

  • Inefficient Decision-Making: Sometimes, poor categorization of risk can cause poor assessment of risks, leading to poor decision-making.
  • Biased Assessment: Many times, due to biases in risk assessment, risk levels can be miscalculated, and it can affect the risk management plan.
  • Can Consume Time: Sometime, over-analysis can lead to a waste of time and resources.
  • No Consideration for Timeframe: The risk matrix does not consider how risk can change during the project life cycle.

One of the most important tools in risk management is a risk assessment matrix. The management team for the project can conduct an effective risk analysis and establish a priority order for the risks associated with the project because they created a risk assessment matrix.

A risk assessment matrix is a living document that should be regularly reviewed and updated as new risks arise or the likelihood or impact of existing risks changes.

risk matrix assignment

I am Mohammad Fahad Usmani, B.E. PMP, PMI-RMP. I have been blogging on project management topics since 2011. To date, thousands of professionals have passed the PMP exam using my resources.

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Good explanation !

Thank you for the brief-yet-thorough explanation, Fahad. Really helpful. Best of luck!

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Risk Assessment Matrix: Overview and Guide

Vice Vicente

Vice Vicente

December 7, 2023

Risk Assessment Matrix: Overview and Guide

In today’s modern threat landscape, compliance risk, cybersecurity risk , fraud risk , and even climate change risk can have a significant impact on your company’s reputation and bottom line. External risk events like the COVID-19 pandemic point to an increasing need for businesses to develop a  risk assessment plan that helps them execute certain strategies and achieve objectives effectively, even in the face of an unprecedented risk landscape.

While you’ll never be able to eliminate business risk entirely, prevention is the best insurance against loss. By defining, assessing, and analyzing risk with a risk assessment matrix, you’ll cultivate a solid understanding of your risk environment and be able to accurately measure and manage risk before it occurs — saving your company time, money, and resources.

In this article, we break down how to create a risk assessment matrix in four easy steps and how to monitor your risk matrix so you can continue to identify emerging threats.

What Is a Risk Assessment Matrix?

A risk assessment matrix, also known as a Probability and Severity or Likelihood and Impact risk matrix, is a visual tool depicting potential risks affecting a business. The risk matrix is based on two intersecting factors: the likelihood the risk event will occur and the potential impact the risk event will have. In other words, it’s a tool that helps you visualize the probability versus the severity of a potential risk.

Depending on likelihood and severity, risks can be categorized as high, moderate, or low. As part of the risk management process , companies use risk matrices to help them prioritize different risks and develop an appropriate mitigation strategy. Risk matrices work on large and small scales; this system of risk prioritization can be applied at the discrete project level, or at the enterprise level.

Take the risks of the COVID-19 pandemic as a risk assessment matrix example. Supply-chain disruption might be classified as a high-level risk — an event with a high probability of occurring and a significant impact on the business. This risk affects the entire organization and would be an example of an enterprise-level risk. Meanwhile, at the project level, COVID-19 could pose a “key person” and timeline risk if a team member crucial to the project contracts COVID-19 and is unable to work for a significant period of time. This risk may not affect the entire organization but has a significant impact on the project. At the project risk level, this might also be an event with a high probability of occurring and a significant impact on the project.

Still, even unusual risk events can have a significant impact on business outcomes. While it’s uncommon in many industries, a fatal workplace injury would be high-impact and reportable to OSHA. That’s why it’s so critical to have an accurate picture of all the potential risks your business faces so you can assess their impact and create a successful risk management plan.

Unlocking Operational Risk Management: Empower the Front Line to Effectively Manage Risk

How Does a Risk Matrix Work?

Risks come in many forms: strategic, operational, financial, and external. The risk assessment matrix works by presenting various risks as a chart, color-coded by severity: high risks in red, moderate risks in yellow, and low risks in green. Every risk matrix also has two axes: one measuring likelihood and one measuring impact.

Likely risk events may have a  61 to 90 percent chance of occurring , while highly unlikely events are extremely rare, with a less than 10 percent chance of occurring. Depending on the business and its risk appetite, an insignificant impact may cause a negligible amount of damage — such as a loss of less than $1K — while a catastrophic impact might create losses of $1M or more.

By grading the risk event’s likelihood and impact, the risk matrix provides a quick snapshot of the threat landscape. Visualizing the threat landscape in this way, audit, risk, and compliance professionals can more easily foresee and determine how to minimize events that can have a substantial impact on the company.

Why Is a Risk Matrix Important?

A risk matrix can help businesses cultivate a solid understanding of the risk environment, helping them manage and mitigate risks before they occur. The magnitude and complexity of business risks continue to grow. KPMG’s  Internal Audit: Key Risk Areas 2023 , outlines ten key and emerging risks that set the stage for a new normal that will impact businesses for years to come:

risk matrix assignment

Image: KPMG 2023 Key Risk Areas

Now more than ever, companies must meet the challenges of the present — and the future — with risk-informed decision-making.

The risk assessment matrix is a crucial tool in risk management for three reasons:

1. Easy Prioritization of Risks

All risks aren’t equal. A risk matrix allows you to prioritize the most severe risks your company faces. As mentioned previously, having a comprehensive view of today’s modern threat landscape is critical for preventing value losses. All companies must take on some level of risk in order to succeed, but calculated risks based on a robust risk analysis will help businesses take on risks in a way that helps achieve objectives.

While it may be tempting to allocate resources to all potential business risks, some operational risks — such as major reputational damage due to a breach of private data, or an excessive increase in operating costs due to a natural catastrophe — must be prioritized before others.

By rating and color-coding these risks in a risk assessment matrix, audit, risk, and compliance professionals can identify the most pressing threats to the business and plan for them.

2. Targeted Strategy for Managing Risks

Just as all risks aren’t equal, all risks don’t carry the same impact. With its prioritization of the most pressing threats, the risk assessment matrix enables professionals to craft a targeted strategy for managing high-risk events. Focusing your attention and resources on the highest risks will benefit your overall business strategy since these risks have the biggest impact and can pose the greatest value losses.

From a project management perspective, for example, a brief bottleneck in the project workflow would create little impact, provided there was enough float built in at the beginning of the project design. A cost risk that significantly escalates the project cost would have a severe impact, however, and requires a targeted management plan.

As any project manager knows, Murphy’s law is inevitable: what can go wrong, will go wrong. Appropriately planning for cost risk due to factors like scope creep will ensure a project’s success. With the help of the risk matrix, planning for Murphy’s law becomes a lot easier.

3. Real-Time View of the Evolving Risk Environment

Audit, risk, and compliance professionals know risks can be emergent and recurring. The risk assessment matrix enables you to identify specific types of risk, their probability, and their severity, and maintain a real-time view of the evolving risk environment.

Though emergent risks are by definition unknowable, businesses can identify areas of vulnerability at the strategic level by strengthening their  enterprise risk management processes. By looking at early warning signs or trigger events indicating something is amiss, companies can maintain business continuity in an increasingly dynamic and complex risk landscape.

Strategic risk assessment tools like the risk matrix also enable companies to track patterns of risk — threats that are likely to reoccur and therefore require a year-over-year mitigation strategy.

How to Make a Risk Assessment Matrix

Although the magnitude and complexity of business risks continue to grow, creating a risk assessment matrix doesn’t have to be a complicated process. There are four basic steps to making a risk assessment matrix:

risk matrix assignment

Step 1: Identify the Risk Landscape

Because the magnitude and complexity of business risks continue to grow, it’s essential you develop a comprehensive picture of the total risk landscape. Project risks vary in category and remediation strategy compared to enterprise-level or macro-level risks. Project teams should tailor their focus based on the scope of their risk assessment.

To begin, hold brainstorming sessions with key stakeholders in your organization so you can mine insights and start generating a list of ideas that will serve as the foundation of your risk assessment matrix. Since risk analysis is subjective, it’s vital to get a wide variety of stakeholder input — doing so minimizes the chances of missing something valuable.

Start your brainstorming session by categorizing risks according to the following criteria:

  • Strategic Risk : risks associated with failed business decisions.
  • Operational Risk : risks associated with breakdowns in internal processes/procedures.
  • Financial Risk : risks associated with financial loss.
  • External Risk : risks associated with uncontrollable sources.

Begin with the highest-level risks related to business functions, such as operations, and then narrow your focus to specific processes within those functions, such as supplier management. Don’t forget to take into account prior risks that have already been identified!

Step 2: Determine the Risk Criteria

After brainstorming risks associated with the larger risk landscape, determine the criteria by which you’ll be evaluating these risks. As mentioned earlier, risk assessment matrices typically use two intersecting criteria:

  • Likelihood : the level of probability the risk will occur or be realized.
  • Impact : the level of severity the risk will have if the risk is realized.

It’s critical to achieve consensus on the risk criteria, as this will affect not only the way you calculate your risk matrix but also the discussions you’ll have on how to mitigate your risks. Accurate measurement is the key to successful risk management!

Step 3: Assess the Risks

Now, assess the risks based on your risk criteria, providing a qualitative risk analysis according to a predefined scale. Most organizations use the following, three-part scale to assess severity:

  • Moderate/Medium risk

A more granular approach could prove useful as well. Expanding the scale to a 5×5 matrix is common, where 1 is extremely low-risk and 5 is extremely high-risk, providing more insight into levels of severity and helping companies allocate resources more efficiently.

Organizations can opt to adapt either the 3×3 or 5×5 risk assessment matrix template or develop their own. Best practices require at least three categories for each of the risk’s probability of occurrence and impact/severity.

risk matrix assignment

Organizations may also opt to give a risk a cumulative “Risk Score” which is usually derived by adding or multiplying the risk’s Likelihood score by the risk’s Impact score. “Weighting” is another option businesses can use to customize or adjust their risk scoring – perhaps the identified risks associated with a certain project or department take priority, and so they could be weighted heavier in a risk assessment. To avoid confusion, the company’s risk assessment matrix methodology should be formally documented in policy and procedure documents, including any weighting and any changes to the risk process or approach.

Step 4: Prioritize the Risks

Finally, compare the different levels of risk (high, medium, or low) to the risk criteria (likelihood and impact). Prioritize those risks that pose the highest likelihood and impact, and create a  risk assessment plan to effectively mitigate them.

Keep in mind, the risk landscape is constantly evolving, and the risk assessment matrix should be updated multiple times a year (annually at minimum) in order to reflect the changing risk environment. Failure to update the risk assessment strategy could result in missing emerging risks that may disrupt business objectives and continuity.

How to Determine the Likelihood of a Risk Occurring

An essential component of the risk assessment matrix is determining the likelihood of a risk occurring. After all, if you incorrectly determine the probability of a risk, you’ll be missing a critical opportunity to prevent unnecessary value losses.

Most companies use the following five categories to determine the likelihood of a risk event:

5: Highly Likely. Risks in the highly likely category are almost certain to occur. Typically, risks with  91 percent or more likelihood fall into this category.

4: Likely. A likely risk has a 61-90 percent chance of occurring. These risks need regular attention, as they are bound to reoccur and therefore require a consistent mitigation strategy.

3: Possible. Possible risks may happen about half the time — they have a 41-60 percent chance of occurring and need attention.

2: Unlikely. Risks in the unlikely category have a relatively low chance of occurring — 11 to 40 percent. But they may still affect your business, so it’s a good idea to keep an eye on them.

1: Highly Unlikely. Highly unlikely risks are exactly as they sound, with a low probability of occurring.

If the business is using a 3×3 risk matrix, the following three categories of likelihood suffice:

1: Unlikely. Risks in this category have a relatively low chance of occurring.

2: Likely. Risks in this category are predicted to occur and require a mitigation strategy.

3. Highly Likely. Risks in this category are almost guaranteed to occur and require a mitigation strategy.

How to Take Care of Your Risk Assessment Matrix

Since the modern threat landscape is constantly changing, your risk assessment matrix needs regular attention and iteration to meet the challenges of today and tomorrow. Whether your business needs to establish a solid  enterprise risk management program, cybersecurity risk management program, or strengthen  internal controls to prevent fraud ; risk events, both external and internal, will require regular assessment in order to determine their likelihood and risk impact successfully.

It is recommended for organizations to schedule periodic risk assessments by either internal or external parties, such as IT risk assessments , and incorporate those findings into the central risk matrix. Likewise, it’s crucial to get management and leadership buy-in to risk management and mitigation, so an appropriate manager should review and sign off on the risk assessment matrix whenever it is updated. I suggest setting up a regular schedule or cadence for reviewing the risk assessment matrix at least quarterly, though the minimum for most frameworks is at least annually.

Additionally, risk mitigation or action plans should be updated along with the risk assessment matrix. Various risks will resurface or change in nature, prompting a commensurate change in mitigation strategy. Risks can go up or down in their impact or likelihood scoring, and the mitigation strategies of yesterday may no longer be sufficient for today’s environment. It’s important to take into account regulatory, economic, geopolitical, and technological changes that can have a major impact on your risk plan.

With the help of an up-to-date risk assessment matrix, you’ll be more easily equipped to identify emerging threats and properly allocate resources to mitigate their impact.

Ready to Reduce the Likelihood of Risks?

Using the risk assessment matrix for risk management will reduce not only the likelihood of the risks your business faces but also the magnitude of their impact on business operations. Effectively managing risk has always been critical for success in any business endeavor, but never more so than today. An important part of your risk strategy should involve managing your company’s risks by using integrated risk management software that facilitates collaboration and risk visibility to increase the effectiveness of your risk management programs.

Begin mitigating risk with a single click — get started with  RiskOversight today!

Vice

Vice Vicente started their career at EY and has spent the past 10 years in the IT compliance, risk management, and cybersecurity space. Vice has served, audited, or consulted for over 120 clients, implementing security and compliance programs and technologies, performing engagements around SOX 404, SOC 1, SOC 2, PCI DSS, and HIPAA, and guiding companies through security and compliance readiness. Connect with Vice on LinkedIn .

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How to Use a Risk Matrix in Project Management

Within the perform qualitative risk assessment process, each identified risk’s probability and impact score is mapped within the risk matrix tool to help the Project Manager and team better understand how certain risks may impact the project. The risk matrix tool communicates the overall project risks and supplies information, increasing the effectiveness of a risk response . Students preparing for Project Management Institute (PMI) exams and project managers refining their skills should know what a risk matrix is and how it benefits the project.

Students should know PMI’s Project Management Professional (PMP)® exam uses the term “probability and impact matrix.” However, some project managers informally call it the: risk control matrix, risk matrix, PMP risk matrix, risk matrix PMP, or probability and impact matrix PMP. The term “risk matrix” or “risk matrix PMP” will be used for simplicity.

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What is a PMP Risk Matrix?

When to use a risk matrix, probability and impact matrix pmp, risk matrix elements, how to create a risk matrix, risk matrix advantages and disadvantages.

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PMI’s “risk probability and impact assessment” description states:

  • Consideration of the likelihood a specific risk will occur
  • Consideration of the potential effect on schedule, cost, quality, or performance
  • Impacts will be negative for threats (negative risk)
  • Impacts will be positive for opportunities (positive risk)

Qualitative risk assessment uses the risk matrix tool to understand project risk better. During the risk assessment, risks are identified and documented. The assessment of each identified risk includes determining the probability and impact of it and assigning values. Project managers then calculate risk scores to plot in a risk matrix to create a holistic visual representation of project risk.

The risk matrix’s visual depiction conveys the project’s risks, so the project manager and team are better positioned to determine risk mitigation and response strategies.

Project managers should complete a risk matrix as part of the perform qualitative risk analysis process. The risk matrix tool fits within the overall risk management knowledge area, specifically the early risk processes. After the perform qualitative risk analysis process, each risk’s probability and impact are documented in the risk matrix tool.

Risk probability is the likelihood of occurrence or what are the chances of that risk happening within the time frame of the project. Risk impact refers to the level of disturbance to the project if a risk occurs. Probability and impact are used in conjunction because you can have a risk that will most certainly happen (high probability) but with little measurable change for the project (low impact). Or vice versa, a risk is most unlikely to occur (low probability), but the project will suffer (high impact) if it does happen.

The definitions of probability and impact levels are determined as part of the initial risk assessment. For all risk assessments, the quality of the data used directly correlates to the effectiveness of the resulting project decisions.

The value scale for probability and impact is also tailored to the specific project within the early risk assessment work. Probability and impact definitions and the corresponding values for each should be determined early in the project and consistent throughout the project. Like the definitions, the value range for probability and impact is tailored to the specific project’s scope.

The risk matrix is also called a probability and impact matrix because the two axes must be probability and impact, even if different words are used.

  • axis for probability, values from low to high
  • axis for impact, values from low to high
  • indicators across the matrix of risk scores to signal the level of significance

Companies with formalized risk assessments have risk matrix templates to reflect their project types or industry. Any risk matrix should reflect these elements:

Probability (or Likelihood) on X-Axis

The X-axis should be labeled appropriately to include the scale of values.

  • Probability axis label: probability, likelihood, or likelihood of occurrence
  • low, medium, high
  • unlikely, possible, likely
  • highly improbable, improbable, unlikely, probable, highly probable

Impact on Y-Axis Examples

The Y-axis should be labeled to include the rating scale.

  • Impact axis label: impact, consequence, possible consequence, or severity
  • minor, moderate, major
  • insignificant, minor, moderate, major, significant

In the probability and impact matrix , both metrics must have the same number of intervals for calculations and valid assessment to be possible. For example, there cannot be three intervals for probability (X-axis) and five for impact (Y-axis). A risk matrix is usually a 3 x3, 4×4, or 5×5 grid to easily fit on one page and convey the core information visually. The more intervals used, the more specific the valuation of risk. However, be aware that a bigger scale does not equate to more accuracy. For example, a scale range of 100 values will add complication without adding accuracy to your risk management work.

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Unless there is company-required software, any spreadsheet tool ( Microsoft Excel or Google Sheets , for example) can be used to create a risk matrix. PMI’s A Guide to the Project Management Body of Knowledge ( PMBOK ® Guide ) – Sixth edition (page 423) lists a four-step process: Risk Identification , Risk Analysis, Assessing Risk Impact Level, and Risk Prioritization.

Step 1: Risk Identification

To identify risks, the project manager and team carefully review project objectives: scope, budget, timeline, goals, and resources. From that, the identified risks are documented in the risk register.

Step 2: Risk Analysis

Each project should have tailored definitions of risk probability and impact to increase accuracy in risk assessment and management efforts. The project manager works with the team and stakeholders to define risk probability and values in addition to the risk impact and measurement for the project.

Each risk will have a probability value for how likely it is believed it could occur. In risk analysis , interviews with experts within and outside the project help determine that likelihood.

Step 3: Assessing Risk Impact Level

Each risk also has an impact value for how significant it will be to the project if it occurs. The project’s definition of risk impact, including the values assigned for different levels, is used in interviews and meetings with those familiar with the project type to determine the final impact level assigned.

Step 4: Risk Prioritization

With the identified risks now having a probability value and an impact value assigned, within the specific project’s parameters, the risk matrix tool is ready for risk prioritization. Each risk’s probability value is multiplied by its impact value to calculate the probability and impact score for plotting on the matrix.

Risk Matrix output

With the probability and impact scores plotted on the matrix, the project manager can assign labels to zones to help clarify the range of risk. The labels can be a combination of text and colors to convey ranking:

  • Low: the color green and text label of “low”
  • Medium: the color yellow and the label of “mid”
  • High: the color red and the text label of “high”

The low zone should be in the opposite corner of the high. The risk matrix output is a heatmap of risk severity across the project.

Project managers should not depend on color alone to communicate the ranking considering color blindness and the different meanings associated with colors. Do not assume everyone can see red or that the color red means “danger” for everyone. Better to use both text and color for better project team communication.

Risk Matrix as an input

The project manager gains insight into the amount and range of project risk by plotting each risk’s probability and impact score on the risk matrix. The project manager, team, and stakeholders use the risk matrix to group the risks with the most and the least severity to plan accordingly.

The risk matrix tool fits within risk assessment and is a simple and quantitative way of evaluating project risk. It evaluates risks based on their probability of occurrence and the potential impact on the project.

Advantages of Risk Matrix

When used correctly, including with verified and high-quality data, the risk matrix helps the project manager with these critical tasks and decisions:

  • prioritizing all risks to gain an understanding of the level of severity
  • informing more accurate risk management strategies
  • providing low-cost means to conduct risk analysis
  • allocating appropriate levels of resources for risk
  • increasing or decreasing the impact of a risk that does occur

A well-constructed risk matrix is an advantage to the project team in these ways:

  • a visual depiction of risk across the project conveying the significance
  • a means to help the team understand risk across the project
  • identification of areas for which risk is highest
  • information to help better allocate resources for risk

The well-constructed risk matrix is a tool to help the project manager and project team better reach the project goals as planned.

Disadvantages of Risk Matrix

Project managers need to know the disadvantages as well as the advantages of the risk matrix. One inherent disadvantage of the probability and impact risk matrix is the potential exclusion of qualitative risk characteristics and their potential impact. Project managers should use qualitative and quantitative data whenever possible to increase objectivity and accuracy.

For the project, potential disadvantages of the risk matrix tool include:

  • Matrix categories lack the needed level of specificity to enable accurate risk ranking
  • Poor quality data used for values results in inaccurate probability and impact scores
  • Failure to account for the timing of the risk occurring in terms of the potential impact of it
  • Overall subjectivity of risk assessment leading to unreliable values used in calculations

If the project manager fails to communicate the risk matrix results to the team and stakeholders, the team can have several disadvantages. The lack of transparency conveys a lack of trust among the project manager and team, with long-lasting negative impacts during the project. A failure to share the risk matrix with the team creates a lost opportunity for the team to have information to guide their responsibilities within the project better.

Project managers use the risk matrix tool as part of the perform qualitative risk analysis process. The risk matrix tool, known as the “risk matrix PMP” or “probability and impact matrix PMP,” is the visual representation of project risk allowing for a better understanding of risk across the project. Project managers use the risk matrix tool to see the “danger level” of risk for the project. Using a well-constructed risk matrix, the project manager and project team can conduct more effective risk mitigation and response aligned to the significance of each risk.

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How to Use a Risk Assessment Matrix [with Template]

Learn how to use a risk assessment matrix by downloading your risk assessment form and matrix below.

Organize your risk management process better with the help of risk assessment templates .

Your organization is facing health & safety, HR, fraud, and other types of incidents. Conducting an organizational risk assessment has moral, legal, and financial benefits, and can help you prevent these incidents.

Consider this example: in 2022, a refining company agreed to one of the largest wrongful-death settlements in history , paying $104.9 million to the family of one of its workers.

While working at a facility in Louisiana, the victim was trapped in a fire after a worker used a side-grinder above, sending sparks raining down on him. The flames burned through his safety lanyard, causing him to fall 80 feet, hitting his head on scaffolding on the way down.

In addition to the legal settlement, the company was cited with an OSHA violation and fined over $12,000.

Had the company proactively carried out a risk assessment, they would've identified and been able to avoid this hazard. They would have understood the possibility of rogue sparks and installed barriers to stop them, or not placed another worker below the grinder's work station.

Instead, they failed to provide a safe workplace and, for that, faced legal repercussions, steep fines, and a hit to their reputation.

To ensure a similar outcome doesn't happen to your company, we've created this step-by-step guide to conducting a risk assessment. Follow along to identify, analyze, and prevent hazards in your workplace so you can protect your employees and your organization.

Don't wait to assess your risks until it's too late. Learn how to create a risk assessment matrix.

Use our free risk matrix template template to start your risk assessment right now.

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  • What is a Risk Assessment?

A risk assessment is " a process to identify potential hazards and analyze what could happen if a hazard occurs " (Ready.gov). Its aim is to help you uncover risks your organization could encounter.

Knowing potential hazards makes it easier to either reduce the harm they cause or (ideally) prevent incidents completely rather than dealing with the consequences afterwards.

This systematic process can uncover glaring risks of fraud, gaps in security, or threats to staff well-being before it's too late. It can also mean the difference between a new project, policy, or process being successful or failing. One catastrophic risk that goes unnoticed could put an immediate stop on any project or event.

Benefits of a Risk Assessment (How to use a Risk Assessment Matrix)

Risk assessments cost time and money to conduct. So why should you bother? The benefits of a risk assessment far outweigh any inconvenience because they can help you avoid incidents, fines, lawsuits, and negative media attention.

Benefits of a risk assessment table include:

  • Money saved:  Picking up the pieces after a cyberattack, break-in, fire, or act of workplace violence is stressful and can cost thousands of dollars; a risk assessment costs far less.
  • Fewer lawsuits: By preventing incidents, you won't have to deal with injured or disgruntled employees seeking legal action.
  • Lower risk of non-compliance : Eliminate risks above and beyond compliance requirements to avoid penalties from regulatory bodies.
  • Safe, happy employees:  When employees see you're making their safety and well-being a top priority, they'll likely want to stick around, which leads to another benefit . . .
  • Lower turnover rate
  • Positive organizational reputation:  Customers and clients want to do business with companies that operate safely, ethically, and fairly.

If you do identify risks, you'll need to create a prevention plan.

Download our free Root Cause Analysis Tools Cheat Sheet to learn methods for uncovering and preventing the root causes of your workplace incidents.

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How to Do a Risk Assessment Matrix

To conduct your risk assessment, begin by defining its scope.

Maybe you want to improve health and safety measures in the shipping warehouse. Or perhaps you want to identify areas of risk in the finance department to better combat potential employee theft and fraud.

Whatever your objective, define it clearly. Conduct separate risk assessments for each goal, department, or project to keep things organized.

Note :  Remember to modify the risk assessment forms to include details specific to your field. For example, a data security risk assessment might list hazard locations (e.g., internal or external).

Step 1: Identify Hazards

Relating to your scope, brainstorm potential hazards. The list should be long and comprehensive. It could include anything from falls and burns, to theft and fraud, to pollution and societal damage, depending on the scope of your risk assessment.

Step 2: Calculate Likelihood

For each hazard, determine the likelihood it will occur. This can be measured as a probability (a 90 per cent chance) or as a frequency (twice a year).

Then, based on the likelihood, choose which bracket accurately describes the probability:

1. Unlikely

An unlikely hazard is extremely rare. There is a less than 10 per cent chance that it will happen. For example, a blizzard is unlikely to happen at your office in Florida.

Seldom hazards are those that happen about 10 to 35 per cent of the time. For instance, you might determine financial kickbacks seldom happen because you work with very few external vendors.

3. Occasional

An occasional hazard will happen between 35 and 65 per cent of the time. For example, strains from repetitive motions could be occasional for your warehouse employees.

A likely hazard has a 65 to 90 per cent probability of occurring. For instance, employee theft is likely to happen in a retail store that sells high-priced goods.

5. Definite

These hazards will occur 90 to 100 per cent of the time. You can be nearly certain it will manifest. For example, a hurricane will definitely happen at your office in coastal Florida.

Step 3: Calculate Consequences

Next, in the same fashion as above, calculate potential loss using either quantitative measurements (dollars lost or spent), qualitative measurements (descriptive scale) or a mix of both.

Then, based on the magnitude of the consequences, choose which bracket accurately describes the losses.

1. Insignificant

The consequences are insignificant and may cause a near negligible amount of damage. This hazard poses no real threat. Examples: loss of $1K, no media coverage, and/or no bodily harm to employees or customers.

2. Marginal

The consequences are marginal and may cause only minor damage. This hazard is unlikely to have a major impact. Examples: loss of $10K, local media coverage, and/or minor bodily harm (e.g. cuts, scrapes, sprains, minor burns).

3. Moderate

The consequences are moderate and may cause a sizeable amount of damage. This hazard cannot be overlooked. Examples: loss of $100K, regional media coverage and/or minor bodily harm.

4. Critical

The consequences are critical and may cause a great deal of damage. This hazard must be addressed quickly. Examples: loss of $1M, national media coverage, major bodily harm and/or police involvement.

5. Catastrophic

The consequences are catastrophic and may cause an unbearable amount of damage. This hazard is a top priority. Examples: loss of $10M+, international media coverage, extreme bodily harm and/or police involvement.

Tap into your best risk-detecting resource: employees

Employees are "on the ground" and might notice issues and risks you're missing. Use this free cultural assessment survey template to get employees' input on your organization's weak points.

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Step 4: Calculate Risk Rating

Assign each hazard with a corresponding risk rating, based on the likelihood and impact you've already calculated. For example, a hazard that is very likely to happen and will have major losses will receive a higher risk rating than a hazard that's unlikely and will cause little harm.

Risk ratings are based on your own opinion and divided into four brackets. They are:

Low risks can be ignored or overlooked as they usually are not a significant threat. A definite hazard with insignificant consequences, such as stubbing your toe, may be low risk.

Medium risks require reasonable steps for prevention but they’re not a priority. A likely hazard with marginal consequences, such as a small fall, may be medium risk.

High-level risks call for immediate action. An occasional hazard with critical consequences, such as a major vehicle crash, may be high risk. Examples: severe bodily harm (e.g. broken bones, third-degree burns, concussions), severe property damage, large data breach , national media coverage.

Extreme risks may cause significant damage, will definitely occur, or a mix of both. They're top priority. An unlikely hazard with catastrophic consequences, such as an aircraft crash, is an extreme risk. Examples: death, property destruction, complete data breach .

Experience a near miss? Don't forget to document that as a risk.

Download the free Near Miss Reporting Form Template to track and manage these safety incidents, then use the data to prevent unsafe conditions in the future.

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Step 5: Create an Action Plan

Your risk action plan will outline steps to address each hazard, reduce its likelihood, reduce its impact, and respond if it occurs.

Depending on the severity of the hazard, you may wish to include notes about:

  • Key team members (e.g. project manager, PR or Communications Director, subject matter expert) and their responsibilities if the hazard occurs
  • Preventative measures
  • A response plan for media and stakeholders (e.g. customers, vendors, clients, shareholders, board members)

Step 6: Plug Data into Matrix

A risk assessment matrix simplifies the information from the risk assessment form, making it easier to pinpoint major threats in a single glance. This convenience makes it a key tool in the risk management process, as it helps you make decisions faster and more easily.

Every risk assessment matrix has two axes: one that measures the consequence impact and another that measures likelihood.

To use a risk matrix, extract the data from the risk assessment form and plug it into the matrix accordingly. Simply find the square where the hazard's consequence rating and likelihood meet, and you can see the risk level it falls under.

Green is low risk

Yellow is medium risk, orange is high risk, red is extreme risk, fraud risk matrix sample: how to create a risk assessment matrix.

Anticipating both internal and external fraud and theft is a crucial component of any company’s antifraud efforts. Developing a risk assessment helps you identify hazards proactively so you can take precautionary measures or, if required, a fraud response plan.

Examples of hazards that may need to be addressed in your fraud risk assessment include:

  • Asset misappropriation (check fraud, billing schemes, theft of cash)
  • Fraudulent statements (misstatement of assets, holding books open)
  • Corruption (kickbacks, bribery, extortion)
  • Conflicts of interest
  • IP/trade secret theft

RELATED: 41 Types of Fraud and How to Detect and Prevent Them

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Health and Safety Risk Matrix Sample

A health and safety risk assessment is important for industries like construction, manufacturing, or science labs where work takes place in potentially dangerous environments.

In a warehouse, for example, workers are at risk of many hazards such as:

  • Severe or fatal injury from falling
  • Repetitive strain injuries from manual handling
  • Sprains and fractures from slips and trips
  • Being crushed by falling objects
  • Being hit by (or falling out of) lift trucks
  • Crush injuries or cuts from large machinery
  • Moving parts of a conveyor belt resulting in injury
  • Exposure to hazardous substances

However, workplaces in every industry can benefit from health and safety risk assessments.

They must also include things like workplace violence and other dangerous employee misconduct , infectious disease transmission, air quality, and ergonomic concerns.

  • Project Risk Matrix Sample

Before you kick off any project, event, or activity in your organization, conduct a thorough risk assessment to identify and assess potential hazards. Once these risks are better understood, your team can plan how best to prevent and mitigate the hazard.

Brainstorm hazards in several categories, including:

  • Technological (data breach, service outage)
  • Cost (funding falls through, go over budget)
  • Contractual (modified requirements, contractor pulls out)
  • Weather (tornado, wildfire)
  • Environmental (oil spill, air pollution)
  • People (illness, resignation)

Next Steps & Responding to Risks

Once you have finished your plan, determine how to action each step. What exactly needs to be done to mitigate or prevent the hazard? Who needs to complete these tasks? When should each task be completed by?

Harm reduction is a second option. You can choose to "accept" the risk if the cost of countermeasures will exceed the estimated loss. To reduce the consequences of the risk , develop a mitigation plan to minimize the potential for harm.

The third option is to avoid the risk. For catastrophic disasters such as a workplace shooting or a fire, taking every possible step to prevent the risk from occurring at all is the best (and often only) course of action.

However you plan to deal with the risks, your assessment is an ongoing evaluation and must be reviewed regularly. Experts recommend updating your risk assessment table at least once a year, and perhaps more often depending on your unique situation.

Jump to a section:

  • Benefits of a Risk Assessment
  • How to Conduct a Risk Assessment
  • Identify Hazards
  • Calculate Likelihood
  • Calculate Consequences
  • Calculate Risk Rating
  • Create an Action Plan
  • Plug Data into Risk Assessment Matrix
  • Fraud Risk Matrix Sample
  • Health & Safety Risk Matrix Sample

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What Is a Risk Matrix?

May 13, 2022 - 10 min read

Kat Boogaard

Imagine you’re the assigned project manager on a high-stakes project. The project scope is defined, key stakeholders are in agreement, you’re confident you can stay within the budget, and the project team is ready to dive in.

They start working tirelessly to meet the agreed-upon objectives — and then an unexpected risk meets you midway through the project. You never saw this one coming, so you have no idea how you’re going to get the project back on track and see it through to success. 

If only you had identified and assessed the risk during the project planning phase , you might have felt more prepared to overcome it. That’s what a risk assessment matrix is used for and why you need one for your projects. 

What is a risk assessment matrix in project management?

Risks in project management are unexpected events that may or may not occur and impact your project outcome in some way. According to the Project Management Institute (PMI) , analyzing and managing risks is a key practice in project management . It improves the chances of successful project completion while reducing the consequences of any risk that occurs. 

Risks can appear related to any aspect of a project, including the budget, resources, processes, or technology, to name just a few. While it can be easy to assume that all risks bring negative consequences to the table, it’s essential to understand that positive risks can also occur during the project life cycle. 

A risk assessment matrix (sometimes called a risk control matrix) is a tool used during the risk assessment stage of project planning. It identifies and captures the likelihood of project risks and evaluates the potential damage or interruption caused by those risks. 

The risk assessment matrix offers a visual representation of the risk analysis and categorizes risks based on their level of probability and severity or impact. This tool is a simple, effective way to get a holistic view of the project risks for all team members and key stakeholders.

Risk matrix example

Let’s take a look at a simple risk matrix example for a project. We’re using a 5x5, five-point scale for the impact and probability in this matrix example, but use a scale system that works best for your team. For example, you can use a 3x3 matrix for less granularity.

In this example, you see risk categories ranging from low to high and likelihood ranging from very likely to very unlikely. Using it is as simple as any other matrix: You look for where both of your criteria meet to get your risk rating. 

Let’s say you’re the project manager for a new organization-wide software tool rollout and will be working with a consultant to implement it. For this project, consultant delays are possible due to a lack of resources on their end, and if a delay happens, the impact would be major because it would impact the entire rollout plan. We’d categorize this risk as medium-high based on the example matrix. 

What are the benefits of a risk assessment matrix?

You might be wondering if it’s worth spending the time to assess risks and create a matrix for all of your projects. Well, the benefits of a risk assessment matrix speak for themselves:  

  • You can prioritize all risks with an understanding of the level of severity. Having an overview of all potential risks allows you to prioritize them against one another if multiple risks occur. This prioritization will benefit your project team and help keep them on track if the project does go awry.
  • You can devise strategies and allocate resources for the unexpected. While it’s impossible to fully plan for uncertainty, acknowledging and understanding what risks could occur provides an opportunity to create action plans for those unexpected events. Appropriately planning for risks increases the likelihood of project completion and success.
  • You’ll reduce or neutralize the impact of risks that occur. The unexpected consequences of a risk that’s not thought about in advance might feel more severe and damaging than a risk identified and analyzed early on. Having an awareness of the potential impact can reduce or neutralize the effect of a project risk before it occurs. Hope for the best, but prepare for the worst. 

What are the challenges of a risk matrix?

While risk matrices can be very useful for identifying and preparing for project risks, they are not an answer to all your project problems. Here are some of the challenges of risk matrices:

  • Inaccurate assessments:  The risk matrix categories may not be specific enough to compare and differentiate between risk levels accurately. The severity and likelihood of certain risks are often subjective and therefore unreliable.
  • Poor decision-making: Incorrectly categorized risks can lead to poor decision-making since you do not have an accurate picture of potential issues.
  • Doesn't account for timeframes: Risk matrices don't differentiate between risks that could occur two weeks from now and risks that could occur in two years' time. There is no consideration of how risks could change over the years.
  • Can oversimplify risks: The complexity and volatility of risks can be oversimplified — some risks remain the same over time, while others can change overnight.

How do you calculate risk in a risk matrix?

A risk matrix is a valuable tool for your project planning, and creating one doesn’t have to be complicated. Follow these steps to calculate risk for a project of your own. 

Step 1: Identify the risks related to your project

To complete your risk assessment matrix, you need to start by having an in-depth understanding of your project — the scope, budget, resources, timeline, and goal. You’ll need this information to help you spot the potential risks.

Identify as many risks as you can with your project team. Consider aspects like scope creep , budgetary constraints , schedule impacts, and resource allocation as the starting points for your risk identification process. Create a risk register complete with all of the identified risks, as it will make it easier to create your matrix. 

Step 2: Define and determine risk criteria for your project 

No two risks and no two risk matrices are alike, which means you’ll need to work with your project team and key stakeholders to define and determine the risk criteria you’ll use to evaluate each risk you’ve identified. 

Remember that two intersecting criteria need to be specified, each with its levels: the probability or likelihood that the risk will occur and the severity or impact the risk will have. 

Step 3: Analyze the risks you’ve identified 

After you’ve identified and described all of the potential risks, the next step is to analyze them. In your analysis, use your risk criteria to categorize each risk within its appropriate severity level and probability. 

Many matrices assign a number value to criteria. So, sticking with our example, you might rate the impact ranging from one (insignificant) to five (catastrophic) and do the same with likelihood, where one represents very unlikely, and five represents very likely.

Using the matrix, it’s then easy to multiply severity times likelihood to get a number value. A risk that’s catastrophic and very likely would rank as a 25, whereas one that’s insignificant and very unlikely would rank as a one. It’s a simple and intuitive way to compare and understand risks. 

Step 4: Prioritize the risks and make an action plan

Your final step is to prioritize the risks and create risk management plans to mitigate or neutralize them, with your risks categorized accordingly. You’ll want to outline the steps you’ll take if the risk does occur and the strategies you’ll deploy to help get the project back on track . 

How do you create a risk matrix in Excel?

Wondering how to make a risk matrix in Excel? Start by building a table that reflects the probability and severity scales you’ve defined for your risk assessment. Here are a few tips to help you get started: 

  • After you’ve created your table, add your labels to the rows and columns. Use the columns for severity and rows for the likelihood of occurrence.
  • Once you’ve labeled all of your column and row headers, add the definitions for each probability and severity level you’ve outlined with your team beneath the header title. This helps ensure the team is on the same page when ranking risks within the matrix.
  • Use formatting options to color coordinate the matrix for the best visual representation. You can use the stoplight system (red, yellow, green) for high, medium, and low risks, respectively. Using different colors allows any viewer to easily distinguish the risks based on the likelihood that they will occur and the amount of damage or interruption they’ll cause. 

How do you create a risk matrix in Wrike? 

If an Excel sheet isn’t your jam when it comes to tracking and monitoring risks, you can use Wrike to create a risk matrix. Some of the key features Wrike has that you can use to assess project risk include: 

  • Custom fields that allow you to build out the severity and probability any way you want to. You could turn these into drop-down rankings on a one-to-five scale or use the text option to label your categories.
  • Table view to provide greater visibility into the risks and a similar table to the one you can create in Excel.
  • Reports and calculated fields to automate the data associated with your assessed risks.
  • Interactive Gantt charts that allow you to create task dependencies and streamlined automation of changing project dates and deadlines. Project progress can be monitored in real-time, which allows your team to keep risks top of mind, so the important stuff doesn’t get overlooked.

The best part about using a platform like Wrike is that it can automatically update and adjust as your project progresses, saving you from the manual work required in Excel. 

What do you do with risk matrix results?

So, what does a risk matrix accomplish for you? The short answer is that your matrix results help you create a risk response plan. 

To start with, it’s crucial to address the risks that are ranked high or extreme. Depending on the project and your team’s resources, you may only need to monitor the medium and low-risk categories rather than taking immediate action. 

Finally, reference your risk matrix throughout the project until it’s marked complete and successful. Don’t make the mistake of not committing to risk management as an ongoing process. Using this tool is a powerful way to support your project team and mitigate any bottlenecks that stand in the way between them and a winning project.

Are you ready to get ahead of the game and stop losing sleep over project risks? Sign up for a free trial of Wrike to start building risk matrices with your team today.

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Kat Boogaard

Kat is a Midwest-based contributing writer. She covers topics related to careers, self-development, and the freelance life. She is also a columnist for Inc., writes for The Muse, is Career Editor for The Everygirl, and a contributor all over the web.

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  • Project Management

How to use the risk assessment matrix to organize your project better

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Rarely do projects get launched without running into some kind of problem. Living in a world where this does not happen would be like a dream. However, in today’s world market, trends change rapidly, so the risk cannot be avoided.

If you are launching your business, you should consider doing a risk assessment matrix. Even when you are doing a new task, one of the questions that you should ask is, “What could go wrong?”. In the modern digital world, a lot of online tools exist that help and automate building the forecasts and planning your new business but in many cases, it’s still good to do this manually.

A risk assessment matrix is a tool that was developed to analyze risk. Yes, we can use data to analyze risks. By doing so, any organization can detect and prioritize different risks. They do this by estimating the probability of occurrence.

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How to use the risk matrix and RACI chart to assess and assign risks in projects

You know that you need risk management, but you're not sure how to go about it... Learn how to use the risk matrix and RACI chart to assess and assign project risks!

Sarah Saleh

Sarah Saleh

I love writing; it's a path to a world where everything goes. I create content at Jexo, hoping to bring something new to an industry that is essentially about people.

More posts by Sarah Saleh.

No one can ever truly eliminate risks; be it in relationships, businesses or even politics. We often think we’re in control…until we’re not, why? Because Murphy’s Law doesn’t abide by anyone’s parameters. Now, what we CAN do, however, is manage risks by defining, assessing and assigning them.

What's in here:

  • What are these risk management terms: risk register, risk matrix, and RACI chart?
  • Once you’ve assessed your risks, you can use the risk assessment matrix to understand your risk environment, and manage things before they hit you in the face.
  • Save time, resources and money by knowing how to assign risks with a RACI chart.

What is risk assessment?

We use the term risk assessment (or hazard identification) to explain the process of identifying risk factors that can possibly cause harm. Once you’ve identified the risks, you can then analyze them (risk analysis) and evaluate (risk evaluation). Only then will you be able to get insight into the severity of the risk and how to go about fighting it. The process of risk elimination must be done quickly to make sure your risks don’t spread further.

What is a risk register?

A project risk register is a tool that project managers use to track and monitor risks that may have an impact on their projects. The purpose of a project management risk register is to identify, log and track potential risks. Any risk that you identify as having an impact on your project should be looked at by the team and logged into the risk register. For more on risk registers and how to go about creating them, here’s a good article !

What is a risk matrix?

The risk matrix, also known as the risk assessment matrix, is a visual tool that can show you the possible risks affecting your project. This risk matrix in project management is based on two components: the likelihood of your risk happening (or probability) and the potential impact it might have.

To put it simply, the risk matrix is a tool that allows you to visualize the possibility vs. severity of a potential risk. Risks are therefore categorized as either low, moderate or high, depending on their likelihood, as well as their impact. Keep in mind that this would apply to the most basic form of the risk matrix.

The 3 colors of the risk matrix - low, moderate, high risk

What is the risk matrix used for?

Risks come in many shapes and forms, but the 3x3 risk assessment matrix presents these risks in a simple, green-yellow-red chart. Red represents the high risks, yellow, the moderate ones, and green represents the low risks. All risk matrices have two axes; one for probability (or likelihood) and one for impact (or effect). When dealing with a slightly bigger risk matrix, we add orange to the mix!

The 4 colors of the risk matrix: low, moderate, high, very high risk

Regardless of the parameters you choose in order to measure the likelihood and impact of your risks, one of the fastest ways to go about estimating risks in your project is the risk assessment matrix.

Why are there different sizes for the risk matrix?

It’s all about precision. Risk matrix sizing/complexity is based on how you choose to define the Probability and Impact ranges in your risk matrix; but more importantly, it’s about how accurate you are at ranking those risks.

Probability and Impact in the risk matrix 4x4

As long as you’re able to rank a risk accurately enough, then there’s not much difference between, say, a 4x4 risk matrix and a 5x5 risk matrix. Avoid using risk matrices that are too small, because then your range of uncertainty is way too vague; or matrices that are too big, because you end up constrained.

Impact and likelihood in the risk matrix 3x3

With a 3x3 matrix, you’ll find it difficult to visualize the difference between acceptable and unacceptable risk. With a 6x6 matrix on the other hand, the risk impact of Extreme vs. Severe, for example, becomes insignificant.

How to create a risk matrix in risk management?

Creating a risk assessment matrix may sound complicated at first, but in reality, it’s a fairly simple process. There are actually four steps to creating a risk assessment matrix .

1. Identify your risk landscape

This is represented as a full-scale visual of your overall risk. How do you come up with it? Well, you go through a brainstorming session with the team to discuss potential risks, then you rank those risks according to the level of threat they bring about.

2. Find out the risk criteria

Once you’re done brainstorming, you then decide on the criteria you’re going to be using to evaluate your risks. As I mentioned above, the risk assessment matrix uses probability (i.e. likelihood of that particular risk happening) and its impact. This is where you’ll see how to go about mitigating your risks.

3. Assess the risk

In order to assess your risks, use the risk criteria decided upon in Step 2. We usually use a qualitative scale like “Low, Moderate and High” to assess the severity of the risks.

Levels of risk assessment in the risk matrix

4. Prioritize the risks

When you’ve finished assessing the risks, the next step is to prioritize them. How do you do that? By comparing them based on severity. Is it a high, moderate or low risk? How likely is it? What’s the impact? You then multiply probability by impact to get a score for that risk, which you will then use to prioritize your risks. The risk with the highest probability and highest impact would then be a top priority, and so on and so forth. That’s when you come up with a plan to eliminate your risks based on how they score.

Keep in mind that the risk assessment matrix will change throughout the year, based on various factors; if you fail to update it, you’ll end up missing out on a new risk that could bring about some great threat!

Advantages and disadvantages of the risk assessment matrix

Just like with everything else in life, there are advantages and disadvantages to using the risk assessment matrix.

What are the advantages of using the risk matrix?

There are many advantages to using the risk matrix; I’ll name a few here:

  • The risk matrix creates awareness about risks
  • Helps in coming up with a program to control risks
  • Allows identification of the most probable risks
  • Allows visualization of the risk situation
  • Simplifies the risk situation for everyone
  • Does not require prior knowledge to understand

What are the limitations of the risk matrix?

It’s important to remember a few things when dealing with a risk matrix:

  • The risk matrix is qualitative, not quantitative
  • It may sometimes oversimplify the complexity of the risks
  • It could fail in keeping up with the changes in risks
  • There isn’t always enough time to carry out a proper investigation
  • The evaluation of risks is always subjective
  • There is no real differentiation between the risk categories

What is RACI in project management?

The RACI chart , also called a RACI matrix, is a type of responsibility assignment matrix in project management. It’s made of spreadsheets (or tables) that showcase the responsibilities of different stakeholders over a specific task, with a set of 4 letters: R A C I. Each responsibility level is usually color-coded and put into a simple table layout.

RACI chart in risk management

What does RACI stand for?

The acronym RACI stands for Responsible, Accountable, Consulted, and Informed.

  • Responsible Manager/team member directly responsible for the task
  • Accountable Anyone with final authority over the completion of a task
  • Consulted Someone with unique insights that the team can consult
  • Informed Client/executive who should be kept in the loop; not directly involved

RACI is the basis for all responsibility matrices; each version, however, will have its own style.

SCRUM example in the RACI chart

Why do you need a RACI matrix?

The RACI matrix brings structure and clarity to the roles stakeholders play within a project or task; it also makes people more confident. Keep in mind that, generally speaking, no one should have more than one responsibility level for every deliverable in the RACI chart.

When to use the RACI matrix?

  • Large companies with very specific deadlines
  • Organizations where responsibilities are unchanging
  • When many stakeholders are involved in various aspects
  • Inter-departmental projects
  • Highly regulated industries like finance, insurance and manufacturing

When not to use the RACI matrix?

  • Small projects within one department
  • Teams that use Agile frameworks like Scrum 😁 Why? Because task responsibility depends on personal initiative and self-organizing, rather than top-down.

Who uses a RACI matrix?

The RACI chart is a tool project managers use to deal with stakeholders, but who will end up using it depends on the scale of a project, the corporate structure, and so on.

How to assess and assign risks in Jira?

As you know, we build simple plug&play apps for Jira; and we're picky about how we manage our risks - which is why I have to mention this here!

If you're interested in how to go about using the risk matrix and RACI chart when managing projects and risks in Jira, we've got the perfect tool for you: Hedge .

Create risk register in Jira and customize

Hedge will allow you to create risks like you would any regular Jira issue, set a template for your risk registers, assign risk owners and view overall scores in a risk matrix, with probability and impact being metrics you can choose from a simple dropdown.

Customize risk matrix in Jira

You can even customize the formula you choose to score your risks! Not to mention the amazing reports you’ll get for every risk register you create.

👉 Start your 30-day FREE trial of Hedge - today !

Atlassian news, tips, how-to articles, videos and podcasts!

risk matrix assignment

Mastering Risk Assessment: A Step-by-Step Guide and Examples

Jeffrey Fermin

When it comes to managing risks, organizations need to be proactive in identifying and assessing potential hazards that could impact their operations.

A risk assessment matrix is a powerful tool that can help organizations prioritize and manage risks effectively. By using this matrix, organizations can evaluate the likelihood and potential impact of identified risks, assign risk scores, and determine the appropriate response.

In this blog, we will discuss the benefits of assessing risks, the steps involved in creating a risk assessment matrix, and how to use it to mitigate potential incidents before they occur . Whether you are a small business owner or a large corporation, this guide will help you identify potential risks and develop a risk management strategy that safeguards your organization's health and safety, HR, financial, and other operations.

What is a risk assessment?

A risk assessment is a systematic process that involves identifying potential hazards, analyzing and evaluating the likelihood and potential impact of those hazards, and determining the appropriate response to mitigate or manage the risks. The aim of a risk assessment is to identify potential risks that could impact an organization's operations, such as health and safety hazards, HR issues , financial risks, fraud, cyber threats, and other potential incidents.

risk matrix assignment

The process typically involves identifying the hazards, assessing the likelihood and potential consequences of those hazards, and evaluating the existing controls in place to manage those risks. This can be done through a variety of methods, such as reviewing historical data, conducting site inspections, or engaging with subject matter experts.

By conducting a risk assessment, organizations can identify potential risks and take steps to mitigate or manage those risks, reducing the likelihood of incidents and minimizing their impact on the organization. This can help protect the organization's reputation, financial stability, and legal obligations.

Benefits of a risk assessment

Conducting a risk assessment offers numerous benefits for organizations, including:

Preventing incidents : By identifying potential hazards and risks, organizations can take proactive steps to prevent incidents before they occur. This can help avoid injuries, damage to property or reputation, or other negative consequences.

Protecting employees : A risk assessment can help identify potential hazards that could impact employees' health and safety. By taking steps to mitigate those risks, organizations can protect their employees and create a safer workplace .

Saving money : Addressing risks before they turn into incidents can save organizations significant amounts of money. By avoiding potential losses from legal fees, damage to property, or business interruption, organizations can protect their bottom line.

Complying with regulations : Conducting a risk assessment can help organizations identify potential regulatory compliance issues and take steps to address them. This can help avoid penalties, fines, or legal action.

Improving decision-making : A risk assessment can provide valuable information to inform strategic decision-making. By identifying potential risks and their potential impact on the organization, leaders can make informed decisions that protect the organization's interests.

Overall, conducting a risk assessment is an important step for any organization looking to proactively manage risks and protect its employees, assets, and reputation.

How to conduct a risk assessment

To initiate a risk assessment, start by defining its scope. This involves clearly identifying the objective of the assessment, such as improving health and safety measures in a shipping warehouse or identifying potential areas of risk in the finance department to combat employee theft and fraud .

risk matrix assignment

It's essential to conduct separate risk assessments for each goal, department, or project to keep the process organized and focused. Additionally, make sure to tailor the risk assessment forms to include specific details relevant to your field. For example, a data security risk assessment might include hazard locations such as internal or external. Taking these steps will help ensure that your risk assessment is comprehensive and effective in achieving its intended objectives.

Step 1: Identity Hazards

The first step in conducting a risk assessment is to identify potential hazards. Hazards can be defined as anything that has the potential to cause harm or injury to people, damage to property, or other negative consequences. Hazards can be physical, chemical, biological, ergonomic, or psychosocial.

To identify hazards, you can use a variety of methods, including:

  • Reviewing past incidents: Reviewing records of past incidents can help identify common hazards that have caused harm or injury in the past.
  • Conducting workplace inspections: Regular workplace inspections can help identify potential hazards before they cause harm or injury. Inspections can be conducted by supervisors, safety officers, or other trained personnel.
  • Engaging employees: Employees can provide valuable input on potential hazards they have identified in their work areas.
  • Reviewing industry standards: Reviewing industry standards and regulations can help identify potential hazards that are common in your industry.
  • Conducting job hazard analysis: Job hazard analysis involves breaking down each job task and identifying potential hazards associated with each task.

By identifying potential hazards, you can take proactive steps to mitigate or manage those risks, reducing the likelihood of incidents and protecting your employees, assets, and reputation.

Step 2: Calculate Likelihood

In step 2 of a risk assessment, the likelihood of each identified hazard is calculated . Likelihood refers to the probability of a hazard occurring, and it is often described using a likelihood scale or bracket. The likelihood scale helps to categorize hazards into different levels of probability.

To calculate the likelihood of a hazard, consider factors such as:

  • The frequency of similar incidents occurring in the past
  • The probability of a hazard occurring based on industry data
  • The probability of a hazard occurring based on expert opinion and experience
  • The presence or absence of controls that could reduce the likelihood of the hazard

Once the likelihood is determined, the hazard can be categorized into a likelihood bracket that accurately describes the probability of the hazard occurring. The likelihood brackets can vary based on the organization's risk assessment framework, but typically, they range from low to high likelihood.

By accurately assessing the likelihood of each hazard, organizations can prioritize their risk management efforts and take proactive measures to mitigate or manage the risks.

Step 3: Calculate Consequences

Yes, consequence brackets can be described using different terms, such as insignificant, marginal, moderate, critical, or catastrophic, depending on the organization's risk assessment framework.

Here is an example of consequence brackets:

  • Insignificant: This bracket describes a consequence that has little to no impact on the organization. For example, a small spill of water on the floor that is quickly cleaned up.
  • Marginal: A marginal consequence has a slight impact on the organization, but it can be easily addressed. For instance, a delay in a project timeline that can be made up with additional resources.
  • Moderate: A moderate consequence has a significant impact on the organization, requiring resources to address it. For example, an equipment breakdown that causes a temporary shutdown of operations.
  • Critical: A critical consequence has a severe impact on the organization, requiring immediate action to address it. For example, a data breach that results in the loss of sensitive information.
  • Catastrophic: This bracket describes a consequence that has a catastrophic impact on the organization, potentially resulting in long-term damage or even the organization's collapse. For example, a major natural disaster that destroys the organization's physical assets and infrastructure.

By accurately assessing the consequences of each hazard and categorizing them into appropriate brackets, organizations can prioritize their risk management efforts and develop effective strategies to mitigate or manage the risks.

Step 4: Calculate Risk Rating

In step 4 of a risk assessment, the risk rating of each hazard is calculated based on the likelihood and consequences. The risk rating helps to prioritize the risks and determine the appropriate risk management strategy.

The risk rating can be calculated by multiplying the likelihood and consequences brackets . The resulting score can then be categorized into a risk rating bracket that accurately reflects the level of risk. The risk rating brackets can vary based on the organization's risk assessment framework, but typically, they range from low to extreme risk.

Here is an example of risk rating brackets:

  • Low: This bracket describes a risk that has a low likelihood and low consequence. It can be managed through routine procedures.
  • Medium: A medium risk has a moderate likelihood and/or moderate consequence. It requires a more detailed risk management plan to address it.
  • High: A high risk has a high likelihood and/or high consequence. It requires immediate action and resources to manage or mitigate it.
  • Extreme: This bracket describes a risk that has an extremely high likelihood and/or consequence. It requires urgent attention and significant resources to address it.

By accurately assessing the risk rating of each hazard, organizations can prioritize their risk management efforts and develop effective strategies to mitigate or manage the risks.

Step 5: Create an Action Plan

Creating an action plan is a critical step in the risk assessment process. Once potential hazards have been identified, assessed, and categorized by likelihood and consequences, it is time to develop a plan to manage or mitigate the identified risks. The action plan should be specific, actionable, and realistic. It should include clear timelines, responsible parties, and measurable objectives.

To create an effective action plan , it's important to prioritize the identified risks based on their risk rating. This will help focus the organization's efforts on the most critical hazards. Next, the action plan should identify specific controls that can be put in place to manage or mitigate the risks. This could include procedures, training, or investments in new equipment or technology.

Once controls have been identified, the action plan should outline specific actions, timelines, and responsible parties for each action. This will ensure that everyone is clear on their roles and responsibilities and that progress can be tracked and measured. The action plan should be regularly reviewed and updated to ensure that it remains effective in managing or mitigating the identified risks. By creating a comprehensive action plan, organizations can take proactive steps to address potential hazards and risks, reducing the likelihood of incidents and protecting their employees, assets, and reputation.

Step 6: Plug Data into a Risk Assessment Matrix

In step 6 of a risk assessment, the data collected in the previous steps is plugged into a risk assessment matrix. A risk assessment matrix is a tool used to visualize the likelihood and consequence of each identified hazard and assign a risk rating to each.

The matrix is typically divided into likelihood brackets on one axis and consequence brackets on the other axis. The matrix is then populated with the hazards identified in the risk assessment, with each hazard being placed in the appropriate cell based on its likelihood and consequence.

The risk rating for each hazard is then determined by the cell in which it falls. The risk rating can be categorized into a risk rating bracket that accurately reflects the level of risk.

The risk assessment matrix provides a visual representation of the risks identified in the risk assessment and helps to prioritize the risks based on their risk rating. This allows organizations to allocate resources and develop effective risk management strategies.

By using a risk assessment matrix, organizations can make informed decisions about which risks to address first and develop a proactive risk management approach that is tailored to the specific risks identified in the assessment.

Fraud Risk Sample

Anticipating the occurrence of both internal and external fraud and theft is a vital aspect of any company's anti-fraud measures. Conducting a fraud risk assessment is an effective way to proactively identify potential hazards, allowing the organization to take precautionary measures or develop a fraud response plan as necessary.

In a fraud risk assessment, various hazards may need to be addressed, such as asset misappropriation (including check fraud, billing schemes, and theft of cash), fraudulent statements (such as misstatement of assets or holding books open), corruption (including kickbacks, bribery, and extortion), conflicts of interest, data theft, and IP/trade secret theft.

By identifying these hazards and determining their likelihood and potential impact, organizations can prioritize their anti-fraud efforts and develop targeted strategies to mitigate or manage the identified risks.

Example of fraud risk matrix:

This fraud risk matrix is divided into five likelihood brackets and five consequence brackets. The likelihood brackets are based on the probability of a fraud risk occurring, while the consequence brackets are based on the potential impact or severity of a fraud risk.

The matrix allows organizations to categorize different types of fraud risks based on their likelihood and consequence, and assign them a risk rating.

For example, a fraud risk that is unlikely to occur but has a major consequence would be assigned a high-risk rating. On the other hand, a fraud risk that is almost certain to occur but has a minor consequence would be assigned a medium risk rating.

Health and safety risk samples

Here are some examples of health and safety risks that might be identified in a risk assessment:

  • Slip, trip, and fall hazards: Wet or slippery floors, uneven surfaces, or cluttered areas can cause employees or visitors to trip, slip, or fall, leading to injuries.
  • Ergonomic hazards: Poor workstation design or repetitive motion can lead to ergonomic hazards such as back pain, carpal tunnel syndrome, or eye strain.
  • Chemical hazards: Exposure to harmful chemicals or fumes can cause respiratory issues, skin irritation, or other health problems.
  • Electrical hazards: Unsafe electrical equipment or faulty wiring can cause electrical shocks or fires, potentially resulting in serious injuries or fatalities.
  • Workplace violence: Acts of violence or threats of violence in the workplace can cause physical and emotional harm to employees.
  • Machinery and equipment hazards: Improper use, maintenance, or guarding of machinery or equipment can lead to amputations, fractures, or other serious injuries.
  • Biological hazards: Exposure to viruses, bacteria, or other pathogens can cause illnesses, such as respiratory infections, flu, or COVID-19.

By identifying and assessing these and other potential health and safety risks, organizations can develop targeted strategies to prevent or mitigate the risks, ensuring the safety and well-being of their employees and visitors.

Project risk samples

Project risk refers to the potential for an event or circumstance to have a negative impact on the success of a project. Identifying and managing project risks is an important aspect of project management, as it helps to ensure that projects are completed on time, within budget, and to the desired level of quality.

Here are some examples of project risks:

  • Scope creep: The project's scope may expand beyond its original definition, resulting in additional work and higher costs.
  • Resource constraints: Lack of adequate resources, such as personnel, funding, or equipment, may delay or derail the project.
  • Technical difficulties: Unexpected technical issues, such as hardware or software failures, may cause delays or require additional resources.
  • Stakeholder resistance: Resistance or opposition from project stakeholders, such as customers or employees, may cause delays or create additional work.
  • Schedule delays: Unforeseen events, such as weather-related disruptions or supplier delays, may cause delays in the project schedule.
  • Communication breakdowns: Poor communication or misunderstandings among team members or stakeholders may result in delays or errors.
  • Quality issues: Poor quality work or products may result in rework or delays.

By identifying potential project risks and assessing their likelihood and impact, project managers can develop risk management plans to mitigate or manage the risks. This may include contingency planning, risk avoidance, risk transfer, or risk acceptance, depending on the nature and severity of the risks.

How you can use AllVoices to avoid risks

AllVoices is a platform that enables employees to report any potential risk . By implementing AllVoices, organizations can provide their employees with a safe and confidential channel to report concerns without fear of retaliation.

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Risk Matrix: How To Use It In Strategic Planning

Download our free Strategy Risk Guide Download this guide

Effective risk management requires proactive identification and prioritization. This is where a tool like a risk matrix can help you and your team. 

In this guide, we will cover different types of risk matrix and how you can use them effectively in strategic planning and risk management.

  • Risk Matrix is a risk assessment tool to visualize internal and external threats and dangers to projects and organizations.
  • They utilize two elements to analyze risk—the likelihood of occurrence and the severity of the consequences on the company.
  • You can choose between 3x3, 4x4, or 5x5 matrix to assess the risk.
  • Pros: Risk matrix frameworks are customizable and adaptable, making them perfect for projects, team assessments, and company strategic overviews.
  • Cons: Risk matrices don’t consider how risks can evolve over time and only give organizations a snapshot of risk probability and severity.

Free Download Download our Strategy Risk Guide Download this guide

What Is a Risk Matrix?

A Risk Matrix is a strategic planning tool to visualize organizations' different internal and external risks. 

They also help to determine:

  • The likelihood of the risk affecting the organization
  • The potential impact of the risk on the organization 

They are an efficient method of risk evaluation, risk control, and prioritizing risk mitigation initiatives . 

Depending on the depth of analysis and organizational needs, risk matrices can vary in size—either 3x3, 4x4, or 5x5. 

However, all risk matrix frameworks use the probability of occurrence (Y-axis) and level of severity (X-axis) to measure the impact of risks on organizations.

3 Types of Risk Matrix

3x3 risk matrix.

A 3x3 Matrix grades risk into three levels. This framework is ideal for smaller businesses, projects, or focus areas to identify risk priorities and assist decision-making. Here’s an example:

Severity: marginal, moderate, and critical 

Probability: improbable, occasional, and probable

Risk Matrix 3x3

4x4 Risk Matrix

A 4x4 Matrix will assess risk probability and severity on a scale of four. The addition of an extra criterion is helpful for certain businesses that need to prioritize risk mitigation strategies. Here’s an example:

Severity: negligible, marginal, critical, and catastrophic

Probability: improbable, remote, probable, and frequent

Risk Matrix 4x4

5x5 Risk Matrix

A 5x5 Matrix uses five levels to assess the probability and severity of the risk. This framework suits complex or large organizations that want to perform an in-depth risk analysis. Here’s an example:

Severity: negligible, marginal, moderate, critical, and catastrophic

Probability: improbable, remote, occasional, probable, and frequent

Risk Matrix 5x5

5 Different Types of Risks

Every business has threats and dangers that need to be mitigated. Here are some types of risks that most organizations must consider:

Reputational risks

This is a danger to how the organization is perceived by the market, shareholders, and government bodies. For example, negative publicity, poor stakeholder relations, or a change in public perception of the company.

Operational risks

These are potential dangers associated with the breakdown of internal processes, resources, or systems. For example, human error, data breaches, and litigation.

Strategic risks

These are external threats that would disrupt the business and likely result in a change in its strategic direction. For example, the introduction of new technology, unsuccessful mergers or acquisitions, or the failure of a product. 

Compliance risks

These are legal, policy, and regulatory risks that will negatively impact the organization and result in fines, litigation, and loss of opportunity. For example, failing to submit audited financial statements on time or not adhering to government regulations.

Financial risks

These are internal and external risks associated with an organization’s financial operations that can result in financial loss. For example, a lack of liquidity during a recession or the failure to pay back debtors on time. 

How to Use a Risk Assessment Matrix?

As an example, our step-by-step guide shows how to create a 5x5 Risk Matrix, but the process can be applied to any version. 

1. Identify risks

The first step is performing an internal analysis to identify all risks in the organization or focus area. Then, look at the organization’s external environment and identify potential threats and dangers.

This may require in-depth research and input from thought leaders, specialists, and industry professionals. If you’re part of a large organization, you’ll likely need to bring other key role players on board in this process. 

Risk management can’t be left up to one person or sidelined. It’s vital to involve different stakeholders and perspectives in risk assessment processes. In this way, you'll be able to see what's going on on the front line, which can help you assess the risk factors more accurately.

Here are some questions that can guide you through this step: 

  • What are our organizational strengths and weaknesses ?
  • Has the organization experienced specific issues in the past?
  • What keeps our management team up at night?
  • What or who are our most valuable assets?
  • Where are we experiencing inefficiencies and losses?
  • Who knows this area of the business best?

After identifying potential risks, assign each one a title and meaningful description.

Tip: You can use different strategic analysis tools during your analysis process, including SWOT Analysis , PESTLE Analysis , or Porter’s 5 Forces .

2. Determine the impact and probability criteria

Next, look at the factors you’ll use to determine your risk criteria for each identified risk. Assign a score of 1 to 5 based on your risk rating criteria and research.

Here’s an example of what a scale of impact criteria might look like for a business measuring operational risks:

Compressed-Table 1

Similarly, create a table outlining the score criteria for the probability of the risk happening. Here’s an example:

Table 3

Work with other key stakeholders in your business to determine how you should rate various risks and what questions you should ask to determine scores. 

For example, if you assess the probability and impact of financial risks, include your CFO and accounting team to benefit from their subject matter knowledge.

When scoring the probability and impact of risks, you can use these questions in your process:

  • How likely will this risk affect us?
  • Are there existing plans to deal with this risk?
  • Is the organization/team/department aware of this risk?
  • Have other businesses in our industry been affected?
  • Is the threat growing or declining?
  • How long has this risk existed for the company?
  • Is the issue complex or easy to solve?
  • Do we have the requisite resources to resolve the problem?
  • Why does this problem exist?
  • Is the threat or danger isolated, or is it the result of other risks?

3. Calculate risk

Identify each risk's probability and potential impact on operations, finances, strategy, and reputation. 

Remember, your score will be based on understanding the risk, the organization, and the external environment.

For example, let’s say an early-stage startup has 3 months of capital but expects to break even in 6 months' time: 

  • Not securing further investment would be rated 5 (Catastrophic - High risk). 
  • If they had 12 months of capital, the risk impact might be rated 3 (Critical - Moderate risk). 
  • Similarly, if the company has recently signed a partnership deal that will increase its revenue by 120% next month, the risk impact might only be 2 (Marginal - Low risk).

Do this by assigning a score based on your criteria for each risk’s probability and impact. Then, calculate the risk score using Excel or Google Sheets. The risk score will indicate your level of risk and which threats and dangers must be prioritized. 

The risk formula goes like this: Level of Risk = Probability x Impact

Here’s an example:

Table 5

Then, plot them onto your 5x5 Risk Assessment Matrix. Your probability score will correspond with the vertical axis and your impact score will be plotted on the horizontal axis. Here’s an example:

Risk Matrix 5x5 (1)

4. Prioritize risk mitigation initiatives and prepare a plan to reduce risk

Now that you have your 5x5 Matrix filled in, it’s clear which risks must be prioritized by the organization. 

You’ll need to create a strategy to address these issues and institute risk management initiatives to reduce the potential risks that pose the highest threat.

This strategy should include:

  • Urgent control measures to address high-risk issues to the business 
  • An action plan to reduce the probability and impact of prioritized risks
  • A long-term strategy to improve the business's overall risk level
  • A contingency plan to deal with worst-case scenarios

5. Implement your plan and monitor progress

Execution is crucial to any effective strategic risk management process. Part of this activity involves monitoring the progress and success of risk mitigation projects.

An example of risk management and reporting in Cascade

Make sure you continue to assess risks as the risk landscape evolves and adjust your plans accordingly. You should perform a risk assessment a few times per year as a best practice. 

Need robust planning and strategic management software to help drive risk mitigation initiatives? Check out Cascade’s #1 strategy execution platform and see how it can help you and your team.

Risk Matrix Example

Here’s an example of a 4x4 Risk Matrix produced by McKinsey & Company to visualize risks associated with cyber security and online businesses. Chief risk and information security officers identified critical assets, known risks, and potential new risks.

In this example, these four risks are:

  • Service disruption
  • Data leakage
  • Vendor Cyber Risk

After identification, internal and external teams assessed the likelihood of occurrence and impact, resulting in the following matrix:

unnamed (7)

As a result of this risk assessment matrix, risk owners prioritized the following risk management strategies, starting with the worst-case scenario:

  • Data Leakage 
  • Cyberfraud 
  • Vendor Cyber Attack 
  • Service Disruption

Benefits of Risk Matrix

The benefits of Risk Matrix are: 

  • Relatively easy to use and understand
  • Presents data in a clear and accessible way
  • Ability to customize the framework to your business
  • Helps strategic planners identify and prioritize risks

Disadvantages of Risk Matrix

The disadvantages of risk matrix are: 

  • It’s based on qualitative assessments and it can lead to sub-optimal resource allocation
  • May create a false sense of security around risks
  • In some cases, categories may not be specific enough to assess risks accurately
  • Often oversimplified
  • Does not consider how risks can change or evolve over time

Where and When Should You Choose a Risk Matrix Framework?

Risk assessment matrix frameworks are typically used during project planning risk evaluations. However, they can also benefit strategic planners who want to understand organizational efficiencies, business priorities, and growth potential.

Because they are very customizable, they can be tailored to various purposes, such as small projects, company overviews, and long-term market assessments. 

Any business leader, portfolio manager, or project manager who wants to identify risks and formulate action plans to address them should consider using this framework.

Risk Management + Strategy Execution Platform = 🚀

How do you stay on top of risk management so that you don't fail? Excel, PowerPoint, and Google Sheets? This sounds like a mess of outdated versions forgotten somewhere on a company's server. The nightmare of every leadership team, head of change, and risk manager. 

You deserve better - a strategy execution platform like Cascade that will help you to manage strategic initiatives and mitigate risks in one place: 

  • Use the platform to build your strategic plan
  • Set objectives, projects, and KPIs
  • Add potential risks to the relevant objective, action, or measure
  • If you want to go one step further, you can create a risk mitigation checklist for each risk
  • Run reports to avoid any unpleasant surprises that could derail your strategy 

Are you ready to give it a spin? Sign up for free and try it out. No credit card and no sales talk until you feel ready to upgrade your risk management process.

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How To Create a Risk Assessment Matrix? Step-By-Step Guide

written by Thomas Johnson , On June 28, 2023

How-To-Create-a-Risk-Assessment-Matrix

Do you need help controlling or managing business risk? Are you starting a project and need to visualize the potential hazards? Creating a risk control matrix could be the solution. 

A risk management matrix is a visual tool that allows business organization members to pinpoint potential risks that threaten to achieve business objectives. Its purpose is to give companies a clear idea of the obstacles they might face and how to mitigate their impact. 

In this post, we tell you everything you need to know about the risk management matrix, the reasons for using it, its advantages, and how you can elaborate in simple steps. 

Let's dive in!

What Is a Risk Control Matrix?

A risk control matrix is a visual tool for analyzing and prioritizing potential hazards. A matrix is usually represented in a chart with three key categories: risks, impact, and likelihood. 

Risks are those unexpected and undesired facts or events that can cause the suspension, delay, or interruption of a company's activities and, therefore, the achievement of results. These affect critical factors for developing operations, transactions, or execution of a project, etc. Such as people, raw materials, transportation, security, resources, technology, etc. 

The following risk levels are reflected below, representing how severe the impact will be for the business organization if the hazard materializes (suspension or interruption of activities). 

Probability 

The following key row that a proper risk management matrix must contain is how likely the event is to occur ; if there were no such probability, there would be no reason to place the risk in our matrix. 

Now let's see how to build your matrix!

Heat-map-risk-management

5 Easy Steps to Build a Risk Assessment Matrix

Here's how to effectively create a matrix to optimize your business risk management: let's get started!

Step 1: Identify risks

To do this, you need to gather information from your activities, review your risk history, view reports from previous internal and external audits, view reports from your risk management team, and, most importantly, communicate with your employees. Risks may include natural disasters, human error, cyber-attacks, raw material shortages, supply chain issues, regulatory non-compliance, etc.

Step 2: Determine the likelihood of occurrence

Establishing how likely a risk is to materialize ( very unlikely, unlikely, possible, likely, very likely ) will depend on a review of the risk history, the opinion of experts in the area to which the risk pertains, and even geographic location. For example, if your business is in an area prone to hurricanes or storms, the likelihood of natural catastrophes will be higher. 

Step 3: Examine the impact of each risk

These often range on a magnitude scale from insignificant, minor, moderate, major, and catastrophic . Determining how serious a risk will be for the company will depend on how easy it would be to recover and the chain of events it triggers, e.g., financial losses, reputational damage, lawsuits, legal liability, criminal charges, etc.

Step 4: Establish the risk level

To do this in Pirani, we recommend using a scale from 1 to 5 to rate each identified risk . From the highest probability and impact, the number will increase. It allows you to prioritize the risks and focus on creating control strategies for the more likely ones.

Step 5: Create a matrix for business risk assessment

In this step, it is up to you to take the information obtained and put it in to communicate it to the rest of the members. Place in the first column each of the risks (Risk 1, Risk 2, Risk 3, etc.); in the upper columns, place frequency, and in the next column, the impact. Fill in the cells with the information obtained.

To map the risks, you can place the probabilities downwards in the first cell of each row, the impact in each column, and place the risks accordingly. 

Pro tip: use a color scale to identify risks according to their level of impact and frequency (green, yellow, orange, and red).

Learn more about why you should elaborate on them; read on!

Pirani: Automated Control and Monitoring

Pirani is a specialized risk management software that centralizes information in one place from audit reports and risk history and can be configured and customized according to national and international policies and regulations to be complied with. It facilitates the identification of risks, which then allows the creation of risk indicators; from there, the tool displays intuitive heat maps that reflect the likelihood and impact of risk. It also displays graphs to see the company's strength and control over the risk and its risk profile score, controls, and action plans to mitigate them, all with real-time monitoring. 

Find out more about it!

6 Advantages of Developing a Risk Management Matrix

The elaboration of a matrix for the correct risk assessment has multiple benefits, among which the following stand out: 

  • Knowledge of the risks : this is an excellent mental exercise for the organization's members, which makes them think about those critical elements for its healthy functioning , such as people, operations, resources, etc. See what could hinder your work cycle from continuing.
  • It helps prioritize risks : visualizing the level of impact a risk would have on the company helps members decide which risk needs immediate attention and use their resources to mitigate it.
  • It facilitates risk communication: the risk matrix not only lists the risks identified but, in a common language and in a simple way , allows all organization members to understand the risks to which they are exposed quickly.
  • Empowers decision-making : it is a solid basis for informed decision-making, providing accurate data and analysis rather than mere guesswork or intuition.
  • Optimizes resource assignment : once the high probability of a risk materializing and the severe consequences it would have been known, the company can invest more resources to mitigate them and less in those whose impact and probability are lower.
  • It improves regulatory compliance: it helps company members review internal policies and regulatory protocols to avoid legal and financial consequences. 

Pro tip: periodically review your matrix to ensure it is relevant and up to date, that no new risks have emerged, or potential consequences have changed.  

Have you already made your risk control matrix? Do you use any software to elaborate on it?

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Risk Matrix Template

Maximize your risk management strategy, visually identify the elements of risk associated with a project and prioritize steps needed to mitigate them..

  • Create a visual representation of the risks associated with your projects
  • Use built-in tools to collaborate with teams and come up with risk mitigation solutions
  • Simplify implementation of mitigation processes by exporting quick guides in various formats

Risk Matrix Template

Over 10 Million people and 1000s of teams already use Creately

Identify Potential Areas of Risk

Identify Potential Areas of Risk

Infinite canvas to visualize all project tasks and identify elements that pose a risk.

Multiple app integrations to help you import data across multiple platforms and get a detailed list of all the tasks involved in a project.

Smart shapes and connectors to visualize and identify relationships between risks and outcomes.

Powerful colour and text formatting capabilities to highlight important points and add context to each task to make informed decisions.

Customizable styling options to represent risks according to the likelihood of them taking place.

Prioritize Risk Mitigation

Prioritize Risk Mitigation

Import images and vectors to the canvas and embed documents with in-app previews to provide more context with relevant resources.

Multiple frameworks to visually assess the risk based on multiple factors. Evaluate effort and impact before making any critical decisions.

Add detailed docs, attachments, links and more via the notes feature on each element to capture details and the big picture in a single space.

Freehand drawing to visualize and build on your ideas, concepts, and plans without any constraint.

Understand Risks Together

Understand Risks Together

In-app video and audio calls to work closely and consult with colleagues in real-time.

Real-time cursors for any number of participants. Collaborate with team members on a shared canvas and decide on the most optimal risk management process.

Comment with context , have discussions and follow-ups on the same canvas. Async!

Keep the Teams Aware of Potentials Risks

Keep the Teams Aware of Potentials Risks

Export risk mitigation processes as SVGs, PDFs, JPEGs, and PNGs to publish, present, print, or share.

Multiple access levels and roles to streamline managing, sharing, editing, and reviewing your risk mitigation strategies.

Connect to your favorite tools with Creately plugins for Slack, Google Workspace, Confluence, and more.

INTRODUCING

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Visualize process and user insights with AI templates

Accessing creately viz, what is a risk matrix.

Risk matrix is a project management tool that is used for risk evaluation. It helps evaluate risks in terms of probability and likelihood and the severity of the risk. It’s also known as the probability and impact matrix.

How to Use the Risk Matrix?

  • Bring together a cross-functional team related to the project. Together, brainstorm potential risks. It could be a long list and would include incidents that span from injuries to damage to the environment.
  • Determine the likelihood of these risks occurring. Is it very likely, likely, possible, unlikely or very unlikely?
  • Then determine the severity of impact on the project if any of these risks actually occur. The impact could be very low, low, medium or high.
  • Based on the likelihood and the impact you’ve calculated, assign each risk a risk rating. If a risk has a very high impact and is very likely to happen, it should be assigned a higher risk rate than a risk that may have a low impact and a low probability of occurring.
  • This will help you prioritize risks, or identify which ones you should focus on and in which order.
  • Create an action plan elaborating on the steps you need to take to mitigate the risks and reduce the impact if it actually occurs.
  • Visualize your assessment using a matrix. You can easily do this with Creately’s intuitive table shape. Share the diagram link with your team members and stakeholders so they can collaborate on editing or reviewing it in real-time.
  • Download it as a PNG, SVG or JPEG so you can easily embed it in your internal wiki, or site and add it to the necessary documents or presentations.

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Risk Matrix Calculations – Severity, Probability, and Risk Assessment

October 26, 2023 8 min read

risk matrix assignment

What Is a Risk Assessment Matrix?

Safety Professionals use a risk matrix to assess the various risks of hazards (and the incidents they could potentially result in). Understanding the components of a risk matrix will allow you and your organization to manage hazards more effectively by uncovering “hidden risks” embedded in day-to-day tasks, reduce costly workplace illnesses and injuries by dealing with hazards before they can develop into bigger issues, and increase productivity through proactive prevention of incidents that can grind operations to a halt and result in lost time.

Beyond the financial savings, safety managers also can make more informed decisions based on quantitative risk data, rather than relying on guesswork or a “gut feeling.” By conducting risk assessments using a risk matrix, organizations demonstrate a commitment to safe and responsible operations and better protect their hard-earned reputations, making it easier to attract and retain talent.

Components of a Risk Matrix

The risk assessment matrix works by presenting various risks in a color-coded chart with high risks represented in red, moderate risks in orange or yellow, and low risks in green. Risk matrices can come in many shapes and sizes, but every matrix has two axes: one that measures the likelihood of a risk, and another that measures its severity. In other words, the impact the risk would have on operations.

Using a risk matrix allows you to identify and focus your attention and resources on the highest risks, since these have the biggest impact and can result in significant losses.

Security Risk Matrix

1. Severity

Severity  is first axis of a risk assessment and it measures the amount of damage or harm a hazard could create. Severity it is often ranked on a four-point scale within a risk matrix as follows:

  • Catastrophic – 4:  Operating conditions are such that human error, environment, design deficiencies, element, subsystem or component failure, or procedural deficiencies may commonly cause death or major system loss, thereby requiring immediate cessation of the unsafe activity or operation.
  • Critical – 3:  Operating conditions are such that human error, environment, design deficiencies, element, subsystem or component failure, or procedural deficiencies may commonly cause severe injury or illness or major system damage thereby requiring immediate corrective action.
  •  Marginal – 2:  Operating conditions may commonly cause minor injury or illness or minor systems damage such that human error, environment, design deficiencies, subsystem or component failure, or procedural deficiencies can be counteracted or controlled without severe injury, illness, or major system damage.
  •  Negligible – 1 : Operating conditions are such that personnel error, environment, design deficiencies, subsystem or component failure, or procedural deficiencies will result in no, or less than minor, illness, injury, or system damage.

2. Probability

Probability  is the second axis of a matrix and it measures the likelihood of the hazard occurring. Probability is often tanked on a five-point scale:

  • Frequent – 5:  Likely to occur often in the life of an item.
  • Probable – 4:   Will occur several times in the life of an item.
  • Occasional – 3:   Likely to occur sometime in the life of an item.
  • Remote – 2:  Unlikely but possible to occur in the life of an item.
  • Improbable – 1:  So unlikely, it can be assumed an occurrence may not be experienced.

How to Use the Safety Risk Assessment Matrix

You can calculate a hazard’s overall level of risk by multiplying the two scores you’ve selected for its Probability and Severity values together on your risk matrix.

As an example, consider that a worker is tasked with picking up heavy casters from a box on the floor and carrying them over to a wheel for grinding. The worker typically grinds 20-30 castings per hour.

As part of your risk evaluation, you’ve determined that the worker has a reasonable chance of dropping the heavy item on their foot. Repetitively reaching, twisting, and lifting 15-pound castings could also result in a muscle strain to the worker’s lower back. Using your risk matrix, you’d select a probability value of “Occasional” – or 3 points.

The next step is to consider the consequences the risk could result in. If the worker strains a muscle or breaks a bone in their foot, they could miss at least one shift of work and be put on restricted duty, meaning you’d need to find another employee to fill in for them while they are unable to work. The consequences would be fairly severe, so you select a value of “Critical” – or 3 points on your matrix. By multiplying those values together (3×3), you reach an overall risk level of 9, putting the hazard into the severe (and red) category.

You can then outline and implement controls, like placing the boxes the castings are kept in closer to the grinding wheel — reducing the time the worker would need to carry them. You can also provide them with steel-toed boots to better protect their feet in case they should drop the item. With those controls in place, you can now repeat the exercise of selecting a severity and probability level for the hazard using the risk matrix. The consequences of the hazards would not have changed and would remain at a “Critical” level – 3 points.

This time, however, with controls in place to reduce the likeliness that the hazard would occur, you would select a lower probability level, such as “Remote” – 2 points. By multiplying your severity and probability scores together, you now reach a lower, and more acceptable residual risk level for the hazard in the Medium range (3×2=6). At this point, you might decide that this is an acceptable level of risk for the task, or decide to brainstorm and implement additional controls to bring the hazard’s risk to even lower levels.

Risk Matrix Guide

risk matrix assignment

Best Practices for EHS Risk Management

Besides using a risk matrix for your risk assessments, there are other best practices that organizations can follow. These include:

  • Regularly reviewing and updating your risk matrix. Your organization’s risks may change over time, so you should periodically review and determine whether you need to revise your risk matrix to better account for a changing risk landscape.
  • Monitoring operations. EHS managers should monitor day-to-day operations to confirm that safety protocols and control measures are being followed and that risks have been mitigated to an appropriate level.
  • Investigating incidents. Organizations should investigate incidents to determine their root causes and develop strategies to prevent similar incidents from occurring in the future. Root cause analysis can help you to uncover whether the controls that you’ve implemented to mitigate a hazard are falling short and need to be adjusted.

Hazard Risk Mockup

Risk management technology can also save EHS professionals valuable time and resources. Risks pose real-time threats, and you must be able to make informed decisions to mitigate them quickly. Trying to manage assessments using paper and spreadsheets can be unwieldy and time-consuming.

Using safety risk management software, you can continually update and easily modify your risk matrix to meet your specific operational needs. By using a web-based matrix and assessment tool, it also becomes easier to share risk assessments and communicate hazard information across your organization’s locations.

With the help of technology, you can easily revise and add as many levels to your risk matrix as you like and set probability and severity values and their scores. Adding or archiving risk matrix values can be accomplished with a simple click of the mouse. Web-based risk matrices can also automatically calculate a hazard’s risk after you choose its probability and severity, saving you time. Safety software can even help you take your risk assessments a step further by allowing you to calculate a hazard’s residual risk after controls are set.

Beyond streamlining risk assessment steps and calculations, risk management software also allows you to get a clearer picture of risks throughout your organization. You can roll-up your data to get a wholistic perspective or zero in on just a single facility or department, examining each significant hazard along with identified controls.

With safety management software, there’s also less chance that your risk assessments will grow old and out of date. When assessing a new risk, you can determine the period in which the hazard will need to be re-evaluated and ensure that this is completed in a timely fashion.

Vector Solutions has partnered with thousands of organizations who have leveraged our hazard and risk management software to save valuable time and effort in recording, tracking, and analyzing operational risks.

Contact us today to learn more about how Vector EHS Management software can support and simplify your risk mitigation efforts.

risk matrix assignment

Vector EHS Management Software  empowers organizations – from global leaders to local businesses – to improve workplace safety and comply with environmental, health, and safety regulations.

Learn more about how our software can save you valuable time and effort in recording, tracking, and analyzing your EHS activities.

Learn more about how we can help:

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Download our  EHS Management Software  Buyer’s Guide .

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Modeling Risk

The Risk Matrix Approach: Strengths and Limitations

The rma is an effective and intuitive technique used by risk managers to prioritize threats to their organization in a graphic manner – but it’s not flawless. what steps does this approach involve, and what are its pros and cons.

Friday, October 7, 2022

By Cristian deRitis

risk matrix assignment

One of the key tasks of the financial risk manager, as one on my colleagues eloquently put it, is to “help people to worry more intelligently.” In part, the risk management field addresses our biological shortcomings, as the human mind is prone to extrapolate small changes to cataclysmic extremes. Indeed, a risk manager’s most significant contribution is often prioritizing threats as they seek to keep their organizations from acting rashly and flying off the proverbial rails.

The risk matrix approach (RMA) is one of the most effective tools for prioritizing threats. It’s a great starting point for not only organizing our own thoughts around risk, but also for illustrating priorities to others in an easily accessible, graphic fashion. The universality of the RMA allows us to apply it equally to complex systems, such as the global macro-economy, and to more micro subjects, such as a specific product, service or process.

RMA in Four Easy Steps

The first and most important step to create a risk matrix is defining scope, with respect to both subject matter and time horizon. This involves a consideration of tradeoffs. The narrower the focus, the more precise and actionable the risks we identify.

A narrow a scope, however, may give us tunnel vision. For example, focusing exclusively on the risk that an individual home’s property value could decline may cause us to focus too much on idiosyncratic factors – such as the color of the walls – while ignoring broader drivers of demand – such as migration into or out of the local area.

The time horizon is equally important. The potential threats we identify may vary considerably if we are looking out over the next day or month versus the next year or decade. For the purposes of exposition, let’s consider developing a risk matrix for the U.S. economy over the next eight quarters – an exercise I run through with my economist colleagues each month.

Cristian deRitis

Having established the scope and time horizon, the next step is risk identification. This can be informed by consulting both internal and external surveys of staff, customers and other stakeholders. At this stage, the objective is simply to collect as many ideas as possible, as opposed to ranking their importance. The global financial crisis and the COVID-19 pandemic taught us that it is better to err on the side of constructing an exhaustive list rather than commit an error of omission.

The third step in the RMA process involves assigning likelihoods and severities to each of our identified risks. These may be quantitatively based by looking at history.

For example, we might look at the historical frequency and severity of hurricanes within a particular geography as a starting point with a statistical grounding. We might then refine these assumptions further based on recent trends and models that account for other factors, such as ocean temperatures or El Niño effects.

On the other hand, some risk assessments are purely qualitative in nature. Solar flares or cyberattacks could be known risks to our business operations, but the probability and severity of these events occurring within our specified time horizon may be unknown, given few – if any – historical episodes. In this case, we might survey subject matter experts or use simulation tools to approximate probabilities and severities, with the understanding that the confidence bands around our assumptions may be quite wide.

Mapping Your Priorities

Once we assign probabilities and severities to each of our risks, the fourth and final step is to construct a chart mapping one against the other, as illustrated in the example below:

risk matrix assignment

When we examine the chart, our priorities are obvious. Items in the upper right-hand quadrant summarize threats with both high probability and high severity. Most of our risk mitigation efforts should be focused here.

Prioritization of our second-tier efforts depends on the relative weighting of likelihood and severity. Are we, for example, more concerned about the high-probability/low-severity events (upper left-hand quadrant) or the low-probability/high-severity event (lower right-hand quadrant)?

The last sector to consider is the lower left-hand quadrant, which summarizes threats with relatively lower likelihoods and severities – at least over our defined time horizon.

The definition of threats is important here. For example, “climate change fallout” in the risk matrix refers specifically to the transition risks involved with moving to a carbon-neutral economy. Although they are significant, these risks are unlikely to impact the U.S. economy in the immediate term, given the time required to legislate and implement new policies. More acute threats related to climate change, such as hurricanes or droughts, would be placed closer to the upper right-hand quadrant.

Strengths and Shortcomings

While risk matrices are great tools for adding rigor to risk management processes, they are not without their weaknesses. Risk managers need to be aware of both their strengths and weaknesses before using them.

RMA Strengths :

  • Presents complex data on multiple threats in a simplified visual way.
  • Increases transparency in the prioritization of risks.
  • Applies to both large, complex systems and individual products or processes.
  • Communicates risks to broad, non-technical audiences in an effective manner.
  • Creates a common entry point for more effective risk discussions.

RMA Shortcomings :

  • Requires precise definition of subject scope.
  • Masks differences in the confidence surrounding likelihood and severity estimates.
  • Oversimplifies the complex, interrelated nature of risks.
  • Depends on a specified time horizon.
  • Gives an air of scientific precision to subjective risk assessments.

One of the drawbacks of the RMA is that it relies heavily on the time horizon specified. While a short-term horizon is helpful for ensuring that organizations focus on the most salient threats, it may delay preparing for slow-growing threats (e.g., climate risk) until it is too late – or costly – to mitigate them. To minimize blind spots, organizations should regularly develop risk matrices for varying time horizons.

Parting Thoughts

A risk matrix is both helpful and insightful, as it presents complex data in way that is visually accessible to a broad audience.

In addition to providing a systemic method for risk identification and prioritization, a key advantage of the RMA is in facilitating constructive discussions related to decision-making. Indeed, when properly executed, the RMA ensures that the decision process is transparent, based on the best knowledge of all stakeholders.

Another key advantage of risk matrices is how straightforward and easy they are to construct. Users need only identify and assess risks before organizing them into a chart. The addition of color coding makes the matrix intuitive and accessible to all stakeholders, both within and outside the organization.

However, the power of the RMA’s simple, logical framework can also become a liability. Users need to appreciate the uncertainty in assigning likelihoods and severities, especially for new and emerging threats with no historical precedents. Estimates are also dynamic in nature, subject to changing conditions and interactions with other threats that may be difficult to separately identify.

Although risk matrices are a better option than considering individual risks in a vacuum, they can still oversimplify the complexity of risk. Matrices should therefore be used as tools to support decision-making, rather than as algorithms for mechanically setting priorities or making decisions without additional input. It is also important to note that risk matrices contain no information about the mitigation actions an organization might take – which could, in turn, introduce new risks.

Provided we bear these limitations in mind, risk matrices are powerful devices for organizing and prioritizing the threats we face. While we can’t control all possible outcomes or foresee all possible threats, we can worry a bit more intelligently by leveraging risk matrices.

Cristian deRitis is the Deputy Chief Economist at Moody's Analytics. As the head of model research and development, he specializes in the analysis of current and future economic conditions, consumer credit markets and housing. Before joining Moody's Analytics, he worked for Fannie Mae. In addition to his published research, Cristian is named on two U.S. patents for credit modeling techniques. He can be reached at [email protected] .

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risk matrix assignment

Risk Dashboard: Matrix, Register and Board for Jira

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Risk management for Jira, Matrix, Register, Board, Project Management tool, Risk Control, Risks

Risk matrix.

The Matrix view presents a visual representation of project risks, categorized based on impact and probability. This page also includes Project Risk Score, Risk Types and Status reports.

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Risk Register

The Register feature serves as a centralized repository for capturing, documenting, and tracking project risks. Use additional attributes such as status, types, and more for improved reporting.

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The Board view offers an intuitive Kanban-style interface for managing risk mitigation tasks. Users can visualize the status of mitigation actions, prioritize tasks, and track progress in real-time.

risk matrix assignment

More details

The Risk Dashboard for Jira streamlines project risk management within the Jira ecosystem. Its Matrix, Register, and Board components provide holistic insights and efficient mitigation strategies.

The Matrix visually categorizes risks by impact and probability, aiding in proactive risk management. The Register centralizes risk tracking, promoting transparent collaboration. Meanwhile, the Board offers real-time task management.

Combining these components empowers teams to identify, assess, and mitigate risks effectively. With enhanced visibility and collaboration, project disruptions are minimized, and success is maximized, ensuring value delivery to stakeholders.

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Integration Details

Risk Dashboard: Matrix, Register and Board for Jira integrates with your Atlassian product. This remote service can:

  • View user information in Jira that the user has access to, including usernames, email addresses, and avatars.
  • Read Jira project and issue data, search for issues, and objects associated with issues like attachments and worklogs.
  • Read and write to app storage service

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Link a Risk using Jira issue panel

IMAGES

  1. 5x5 Risk Matrix: Importance and Examples

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  2. Safety Risk Assessment Matrix

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  3. How to use the risk assessment matrix to organize your project better

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COMMENTS

  1. Risk Assessment Matrix: What It Is and How to Use It

    A Risk Assessment Matrix is used to: Identify potential risks while considering both internal and external factors Present complex information in a simplified format to make it easier to assess issues and drive decision making Prioritize project actions and assist in strategic planning

  2. Risk Matrix Template: Assess Risk for Project Success [2023 ...

    A risk matrix helps you analyze risk by assigning each event as high, medium, or low impact on a scale of one through 25. Once you assess the severity and likelihood of each risk, you'll prioritize your risks and prepare for them accordingly.

  3. What is a 5x5 Risk Matrix & How to Use it?

    A 5×5 risk matrix is a type of risk matrix that is visually represented as a table or a grid. It has 5 categories each for probability (along the X axis) and impact (along the Y axis), all following a scale of low to high.

  4. Download Free Risk Matrix Templates

    Excel | Word | PDF This 3x3 risk matrix template is ideal for teams and organizations that prefer simplicity. The template provides three levels to code both the severity and likelihood of each risk: low, medium, and high (which are assigned values of one, two, and three, respectively).

  5. Risk Assessment Matrix: Definition, Examples, and Templates

    A risk assessment matrix is a tool for assessing and prioritizing risks in risk management. This blog post will discuss the risk assessment matrix, how to create a risk assessment matrix, and provide examples and a template you can use to create your risk assessment matrix. What is a Risk Assessment Matrix?

  6. Risk Assessment Matrix: Overview and Guide

    A risk assessment matrix, also known as a Probability and Severity or Likelihood and Impact risk matrix, is a visual tool depicting potential risks affecting a business. The risk matrix is based on two intersecting factors: the likelihood the risk event will occur and the potential impact the risk event will have.

  7. How to Use a Risk Matrix in Project Management

    August 24, 2022 How to Use a Risk Matrix in Project Management Within the perform qualitative risk assessment process, each identified risk's probability and impact score is mapped within the risk matrix tool to help the Project Manager and team better understand how certain risks may impact the project.

  8. How to Use a Risk Assessment Matrix [with Template]

    #Article How to Use a Risk Assessment Matrix [with Template] Employee Misconduct Ethics & Compliance Organizational Fraud Security Learn how to use a risk assessment matrix by downloading your risk assessment form and matrix below. Organize your risk management process better with the help of risk assessment templates.

  9. What's a Risk Assessment Matrix? Build One in 4 Simple Steps

    A risk assessment matrix is a widely used tool that organizations implement as a part of their risk assessment process to define risks and categorize them based on the likelihood of occurrence and level of impact. Organizations can use different terms to describe their matrix.

  10. What is a Risk Matrix? (With Example)

    A risk assessment matrix (sometimes called a risk control matrix) is a tool used during the risk assessment stage of project planning. It identifies and captures the likelihood of project risks and evaluates the potential damage or interruption caused by those risks.

  11. Risk assessment matrix: Free template and usage guide

    A risk assessment matrix identifies issues that present the greatest potential for business disruption or damage. Use this free template to focus risk mitigation plans. By Paul Kirvan Published: 20 Oct 2023 A risk assessment matrix is a helpful visual tool to identify business risks, threats and vulnerabilities as part of a risk management program.

  12. How to use the risk assessment matrix to organize your project better

    Step 4: Prioritize the risks. When you will see a risk assessment matrix, you will be able to compare different levels of risk. It can include any internal rules or policies. One thing that should be noted is that the risk assessment process can be an ongoing evolution.

  13. How to do risk management with a risk matrix and RACI chart

    1. Identify your risk landscape 2. Find out the risk criteria 3. Assess the risk 4. Prioritize the risks Advantages and disadvantages of the risk assessment matrix What are the advantages of using the risk matrix? What are the limitations of the risk matrix? What is RACI in project management? What does RACI stand for?

  14. How To Use Risk Assessment Matrix: Guide and Examples

    Step 2: Calculate Likelihood. In step 2 of a risk assessment, the likelihood of each identified hazard is calculated. Likelihood refers to the probability of a hazard occurring, and it is often described using a likelihood scale or bracket. The likelihood scale helps to categorize hazards into different levels of probability.

  15. Risk Matrix: How To Use It In Strategic Planning

    Risk Matrix is a risk assessment tool to visualize internal and external threats and dangers to projects and organizations. They utilize two elements to analyze risk—the likelihood of occurrence and the severity of the consequences on the company. You can choose between 3x3, 4x4, or 5x5 matrix to assess the risk.

  16. How to Use the Risk Assessment Matrix in Project Management?

    A Risk Assessment Matrix, also known as a Probability and Severity risk matrix, is designed to help you minimize the probability of potential risk to optimize project performance. Essentially, a Risk Matrix is a visual depiction of the risks affecting a project to enable companies to develop a mitigation strategy.

  17. How To Create a Risk Assessment Matrix? Step-By-Step Guide

    Step 1: Identify risks To do this, you need to gather information from your activities, review your risk history, view reports from previous internal and external audits, view reports from your risk management team, and, most importantly, communicate with your employees.

  18. PDF Improving the Standard Risk Matrix: Part 1

    A risk matrix is commonly used for risk assessment to define the level of risk for a system or specific events and to determine whether or not the risk is sufficiently controlled. The matrix almost always has two categories for assessment: severity and likelihood (or probability). Figure 1 shows an example.

  19. Risk Assessment Matrix

    What Is a Risk Matrix? Risk matrix is a project management tool that is used for risk evaluation. It helps evaluate risks in terms of probability and likelihood and the severity of the risk. It's also known as the probability and impact matrix. How to Use the Risk Matrix? Bring together a cross-functional team related to the project.

  20. Risk Assessment Matrix Calculations

    The risk assessment matrix works by presenting various risks in a color-coded chart with high risks represented in red, moderate risks in orange or yellow, and low risks in green. Risk matrices can come in many shapes and sizes, but every matrix has two axes: one that measures the likelihood of a risk, and another that measures its severity.

  21. The Risk Matrix Approach: Strengths and Limitations

    A risk matrix is both helpful and insightful, as it presents complex data in way that is visually accessible to a broad audience. In addition to providing a systemic method for risk identification and prioritization, a key advantage of the RMA is in facilitating constructive discussions related to decision-making. Indeed, when properly executed ...

  22. Risk matrix

    A risk matrix is a matrix that is used during risk assessment to define the level of risk by considering the category of likelihood (often confused with one of its possible quantitative metrics, i.e. the probability) against the category of consequence severity.This is a simple mechanism to increase visibility of risks and assist management decision making.

  23. Risk Assessment: Process, Examples, & Tools

    Risk management is the proactive control and evaluation of threats and risks to prevent accidents, uncertainties, and errors. Together with risk assessment, these are all vital elements that help make informed decisions such as mitigating risks. Why is it Important?

  24. Risk Dashboard: Matrix, Register and Board for Jira

    Its Matrix, Register, and Board components provide holistic insights and efficient mitigation strategies. The Matrix visually categorizes risks by impact and probability, aiding in proactive risk management. The Register centralizes risk tracking, promoting transparent collaboration. Meanwhile, the Board offers real-time task management.