The purpose of the risk matrix is to determine the risk category (very low, low, medium, high, and high*) so project risk may be addressed according to the impact on project schedule, cost, and benefit.
It is easy to be brave when far away from danger. – Aesop
What’s more, having done this you will be in a much better position to brief the project sponsor: full knowledge of the risks, and therefore acceptance of the consequences should things go wrong, is a prerequisite to approving the project.
Using the Risk Matrix
Risk is any potential threat or occurrence that may prevent you from achieving your business objectives.
Once you have identified the project risks ― see The Risk Wheel ― review each risk in turn and assess both the likelihood of the risk occurring and the severity of the impact on the project if things go awry.
The results of this exercise will help you to prioritise risk and your subsequent efforts to reduce or eliminate risk altogether. As ever, make sure you consider the impact on the three areas of project viability: time, cost and scope.
If you’re doing this as part of a risk workshop ― and you should be ― use it in connection with the risk wheel and simply record the risk category on each Post-it note before proceeding to the third step as described in our article on project risk.
Do you manage risk? Or do you leave things to chance?
Creative Commons image courtesy Pat Murray.