![]() ![]() This will help you prioritize risks, or identify which ones you should focus on and in which order.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. Based on the likelihood and the impact you’ve calculated, assign each risk a risk rating.The impact could be very low, low, medium or high. Then determine the severity of impact on the project if any of these risks actually occur.Is it very likely, likely, possible, unlikely or very unlikely? Determine the likelihood of these risks occurring.It could be a long list and would include incidents that span from injuries to damage to the environment. Bring together a cross-functional team related to the project.It’s also known as the probability and impact matrix. It helps evaluate risks in terms of probability and likelihood and the severity of the risk. Here’s a series of articles that discuss some of the best tools and techniques used for risk management in the field of project management.Risk matrix is a project management tool that is used for risk evaluation. Screenshot by: Sidharth Thakur This post is part of the series: Risk Management - Tools and Techniques Is you’re looking for a risk assessment form, download it here. Most risks in this category don’t require any mediation at all. Green (Low Risk) – The risks in the green are nearly harmless and in most cases these can be safely ignored. However, that does not mean these risks can be ignored altogether. Orange (Medium Risk) – These are risks which can be left out during the formulation of risk management strategies, as these are low priority risks and can be handled as and when they arise. These are also significant risks and it’s advisable to have them included in your risk management strategy. Pink (High Risk) – These are the risks that again must be optimally addressed, however they do not enjoy top priority like the risks in red cells. Prevention and mitigation strategies for all these risks must be framed much in advance so as to prevent their occurrence or to fight them back as soon as they come up. ![]() The significance of these colors is: Red (Extreme Risk) – All risks that fall in the red cells are of utmost importance. Each of the cells on this 5x5 matrix has been given one of the four colors – red, pink, orange and green. Once all the risks have been allocated a place on this risk management probability and impact matrix, here’s how to interpret the entries on this matrix. Insignificant: Risks which do not pose any significant threat and which can be left unmediated without any fear.īased on how each risk scores on these two scales it can be placed in one of the intersecting cells.Marginal: Any risks which will have just a mild impact on the project, still these must be addressed in time.Moderate: Risks which will cause some problems, but nothing too significant.Critical: Risks which can significantly jeopardize some aspects of the project, but which will not completely ruin the project.Catastrophic: A risk that can prove detrimental for the whole project.Impact Considering the impact that a risk will have on the project, the risk can be classified under one of the five degrees of impact: Unlikely – less than 20 percent chance of occurrence.Seldom – 20 to 40 percent chance of occurrence.Occasional – 40 to 60 percent chance of occurrence.Likely – 60 to 80 percent chance of occurrence.Definitely – 80 to 100 percent chance of occurrence.The scale you can use for classifying risks along these two risk measurement metrics is as follows: Probability The likelihood of a risk happening can be classified under one of the following probabilities: Assess project risk with the free template Getting StartedĪlthough there are several different versions of a risk assessment template or risk matrix, the template you’ve downloaded from the above link is of a 5x5 matrix which will help you develop a detailed and comprehensive probability and impact matrix. Before you read on about how to make a risk matrix for your project, you can download a free risk matrix template here and edit it to create a risk matrix for your project. This matrix is used to classify risks on the basis of the impact they will have on the project and the probability of their occurrence. There are a number of tools available for managing risk, but one tool that’s very simple and gives a visual snapshot of the risks that a project faces - is the risk management probability and impact matrix. Risk management is undeniably a critical aspect of project management. ![]()
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