1. Method Name

Risk Assessment Matrix

2. Alternative Names

Probability and Impact Matrix, Risk Matrix

3. Brief Description

A risk assessment matrix is a visual tool used to assess and prioritize risks based on two key dimensions: the probability (Probability/Likelihood) that a risk will occur and its impact (Impact/Severity) if it does occur.

4. Purpose / When to Use

It is used in project management, FMEA, occupational safety (OSH), and in any situation where systematic risk management is required. It helps determine which risks require immediate attention and which can be accepted.

5. Procedure / How to Apply It

1. Identify risks: Create a list of all possible risks associated with the project or process.
2. Define scales: Create scales for probability (e.g., 1–5, ranging from “very unlikely” to “almost certain”) and impact (e.g., 1–5, ranging from “insignificant” to “catastrophic”).
3. Create a matrix: Draw a matrix where one axis represents probability and the other represents impact (e.g., 5x5). Color-code each cell according to the risk level (e.g., Green = low, Yellow = medium, Red = high).
4. Assess and place the risks: For each identified risk, assess its probability and impact, and place it in the appropriate cell in the matrix.
5. Create a response plan: For each risk (especially those in the red and yellow zones), define a strategy
: - Avoid: Modify the plan so that the risk does not occur at all.
- Mitigate: Implement measures to reduce the likelihood or impact.
- Transfer: Shift the risk to a third party (e.g., insurance).
- Accept: Take no action and accept the possible consequences (usually for risks in the green zone).

6. A Real-World Example

Risks were identified while planning an outdoor corporate event. The risk “Bad weather (rain)” was assessed as: Probability = 4 (likely), Impact = 4 (high, would ruin the event). In the matrix, this risk fell into the red zone. Mitigation Strategy: The team secured a large tent as a “backup plan” in case of rain.

7. Benefits

- Visual prioritization: Clearly and concisely shows which risks are the most pressing
.- Structured approach: Ensures that no important risk is overlooked.
- Decision-making support: Provides a logical basis for allocating resources to risk management
.- Improves communication: Facilitates discussions about risks within the team and with management.

8. Risks / Limits

- Subjectivity: Assessments of probability and impact are often subjective and based on estimates
.- False sense of precision: The matrix may give the impression of scientific precision, even though it is based on subjective inputs.
- Does not account for interrelationships: It does not address situations where one risk can trigger another
.- Varied risk tolerance: Different people may perceive the same risk differently.

9. Practical Tips

- Define your scales in advance: Before the assessment, agree as a team on exactly what “probability 3” or “impact 4” means. This will help ensure a consistent perspective.
- Use it repeatedly: The risk matrix isn’t a one-time document. Update it regularly throughout the project.
- Focus on the discussion: The real value isn’t in placing a risk in a cell, but in the discussion that leads to that decision.