In this example, you see risk categories ranging from low to high and likelihood ranging from very likely to very unlikely. For example, you can use a 3x3 matrix for less granularity. 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. Let’s take a look at a simple risk matrix example for a project. This tool is a simple, effective way to get a holistic view of the project risks for all team members and key stakeholders. 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. It identifies and captures the likelihood of project risks and evaluates the potential damage or interruption caused by those risks. 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.Ī risk assessment matrix (sometimes called a risk control matrix) is a tool used during the risk assessment stage of project planning. Risks can appear related to any aspect of a project, including the budget, resources, processes, or technology, to name just a few. It improves the chances of successful project completion while reducing the consequences of any risk that occurs. According to the Project Management Institute (PMI), analyzing and managing risks is a key practice in project management. Risks in project management are unexpected events that may or may not occur and impact your project outcome in some way. What is a risk assessment matrix in project management? That’s what a risk assessment matrix is used for and why you need one for your projects. If only you had identified and assessed the risk during the project planning phase, you might have felt more prepared to overcome it. 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. They start working tirelessly to meet the agreed-upon objectives - and then an unexpected risk meets you midway through the 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. Of course, you can lay it out in any way that you choose as long as you’re following those general guidelines that will help you the most during the qualitative analysis of the risks of your project.Īnd that is the Probability and Impact Matrix for reviewing Risk.Imagine you’re the assigned project manager on a high-stakes project. And that’s the way that they’re prioritizing in this particular probability and impact matrix. And then the impact as a negative impact for threats, or a positive impact for opportunities, and those are multiplied together to give us the outcome.Īs you can see, we’ve got the high impact and high probability up in the top right, and low impact and low probability in the bottom left. So we’ve got very low and very high, or 0.1 to 0.9. As you can see, we’ve got the probability on one side, and its actually given descriptive terms and numbers just so you can see the difference. Here’s an example of a probability of impact Matrix. The reason we use numbers is if numbers are used they can be multiplied to give a probability impact score for each risk, and that’s a great way to prioritize those risks. Or more common is numeric values, where a 5 might be a high, and a 1 might be a low for example. And things like descriptive terms could be used if you want to – so it might have a “high impact”, medium, low, very low. So first of all, both opportunities and threats are rated, so we do want to find the strengths and our weaknesses of our project. So is it a high priority? Is there a high probability and a high impact? Then we probably want to be focusing on that, and the low ones we can maybe leave for later. And what’s the impact if that actually happens? Is it high, is it low? By giving it a rating, it allows project risks to be allocated into priority groups. We ask, “What is the probability of it happening?” Maybe it’s 70 percent for example. It’s a grid for mapping the probability of each risk occurrence, and its impact on your project objectives if that risk occurs. What is a Probability and Impact Matrix? Well, it’s part of your qualitative risk analysis. – See All Project Management Key Concepts –
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