How you label these categories is entirely up to you. Categories along the consequence axis could be called ‘very low’, ‘low’, ‘medium’, ‘high’, and ‘extreme’ or ‘catastrophic’. This traffic light system makes it easy to quickly understand levels of risk.ĭespite this basic structure, risk matrices can vary greatly depending on your organisation and how you use them.įor example, the likelihood axis can be divided into more specific categories such as ‘certain’, ‘likely’, ‘possible’, ‘unlikely’ and ‘rare’. If it is medium, it is shown in yellow or orange. A risk that has an overall low level of risk is colour-coded green. Within a risk matrix, levels of risk are further highlighted with a colour-coded system. Conversely, if the risk falls low on the likelihood scale and low on the consequence scale, the level of risk would be very low. If the risk is high on the likelihood scale and high on the consequence scale, you can define the level of risk as very high. The risks that your organisation could face are placed within the risk matrix depending on where they fall on this scale. Each axis follows a scale of very low to very high. They are typically 5x5 grids that show the likelihood of risks occurring along the Y axis and the severity of their consequences along the X axis. Risk matrices all follow the same basic structure. In this blog, we explain what a risk matrix is in further depth, examine the pros and cons, and outline how you can create and use a risk matrix should you choose to use one.Ī risk matrix is a tool that can help you understand the risks your organisation faces, and their overall likelihood and severity, in a visual way. For those working in risk management, as well those in senior positions, they provide an accessible overview of the risks an organisation faces, potentially making it easier to decide how risks should be dealt with. Although there are some limitations to risk matrices – in part because of their simplicity – there are numerous benefits. A risk matrix is a simple, visual tool that you can use to determine levels of risk.
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