Risk management is an important project management function. While we have tools to identify, assess, and manage risks, it’s sometimes difficult to understand and distinguish the relative importance between them.
A risk probability/impact matrix provides a visual framework that may help decide which risks need your attention. The matrix is based on 2 primary axis.
Probability
A risk is a future event that if it occurs may impact the project. For the purposes of this matrix, risks are classified by high, medium, or low probability of occurrence.
Impact
Risk impact to the project is usually measured in dollars. This matrix classifies risk impacts as high, medium, or low, although the matrix could be easily adapted to reflect dollars, if desired. The probability/impact matrix enables plotting of potential risks within these two axes for a visual representation of the relationships between the risks in terms of probability and impact.
The matrix may give you the visual information you need to decide which risks you want to manage a little closer.
