Risk Assessment

A risk matrix is a tool used in risk management to evaluate and prioritize potential risks based on their likelihood and potential impact. It is also known as a risk assessment matrix, risk heat map, or likelihood-impact matrix.

A typical risk matrix consists of a table with two axes: one for the likelihood of a risk occurring, and the other for the impact of the risk if it does occur. The likelihood and impact of a risk are typically measured on a scale from low to high, and are often color-coded for easier visualization.

The risk matrix is used by risk managers to assign a risk score to each potential risk, based on its likelihood and impact. The risk scores can then be used to prioritize risks and determine the appropriate risk response strategy. For example, risks with a high likelihood and high impact may require immediate action, while risks with a low likelihood and low impact may be acceptable and require no further action.

Overall, a risk matrix is a useful tool for visualizing and analysing potential risks, and can help organizations make informed decisions about risk management and mitigation strategies.