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What is a risk rating matrix?

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Can someone explain to me what a risk matrix is and how to create it? I know that it has to do with ranking risks but I need more details.
asked 3 years ago by anonymous

1 Answer

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A risk rating matrix is a simple matrix with the following columns: The Risk Id, Risk Name, the Risk Description, the Risk Probability, the Risk Impact, and the Risk Score.

Here's an explanation of all the columns:

Risk Id: The id of the risk, starts from 1 for the first risk added to the matrix, and is automatically incremented by 1 for every subsequent risk.

Risk Name: The name of the risk, for example, supplier not delivering concrete on time.

Risk Description: More information about the risk, for example: "There's a possibility that the supplier may not deliver the concrete on time because on the last project we worked on we had this issue with him"

Risk Probability: What is the probability of that risk to occur, should be a number from 0 to 1, the higher the number the higher the likelihood of occurrence.

Risk Impact: What is the impact of that risk (should it materialize) on the project, will the project be completely crippled, or will it be able to cope with this risk? Again, the risk impact is a number from 0 to 1.

Risk Score (for more information on the risk factor, see here: http://www.projectmanagementquestions.com/2115/quantitative-risk-vs-qualitative-risk): Which is the Risk Probability + Risk Impact - Risk Probability x Risk Impact. The Risk Score varies between 0 and 1, and the higher it is the more dangerous the risk is.

Here's a row in an RRM (fields are separated by a "|"):

1|Vendor failing to deliver concrete|The vendor may fail to deliver concrete because we have dealt with him on our last project and we constantly had this problem with him|0.7|08|0.94

(Here's how we calculated the risk score Risk Score = 0.7+0.8 - 0.7*0.8 = 1.5 - 0.56 = 0.94)
answered 3 years ago by humblepm (17,390 points)

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