All projects have risks, but not all risks are the same. There are many potential risks that can affect a project and you need to have a risk management process in place to manage them.
This risk management process consists of risk identification, assessment, mitigation and monitoring. To assess the level of risk, use a risk matrix. Creating a risk assessment matrix gives you a tool to perform qualitative risk analysis and increases the quality of your decision-making.
What Is a Risk Assessment Matrix?
A risk assessment matrix (also called a probability and severity risk matrix) is a visual tool project managers use to assess a risk’s potential impact on their project. A risk matrix is a project management grid, with the probability of a risk represented on the left, and the severity of the risk represented on the top.
All this informs your risk management plan because you have prioritized the risks and created a framework to respond quickly. It also lets you create risk mitigation strategies to manage any impact from high probability, high impact risks.
Once you’ve made a risk assessment, ProjectManager helps you plan and track it in real time. You can create a risk card, which resembles our task cards, to assign the risk, prioritize it and even add a matrix widget to assess the risk level against the likelihood and impact. That gives you the risk level at a glance, allowing you to quickly resolve issues that arise. Get started with ProjectManager today for free.
Why Is It Important?
Risk assessment is one of the most important steps in the risk management process because this is when you prioritize the project risks you’ve previously identified. A risk assessment matrix is a great tool to keep the focus on risks that are more likely to impact the time, cost and scope of your project. The risk matrix also gives you time in the planning phase to create risk mitigation plans for responding to risks that are more likely to happen.
Using a risk matrix to assess and prioritize risks is key to creating a risk mitigation strategy. If you’re using a risk assessment matrix, you can identify project risks and their severity faster. Live tracking lets you view the evolving risk environment, letting you catch risks early and monitor your team’s progress in mitigating them.
Related: Risk Matrix Template
How to Create a Risk Assessment Matrix
Follow these four steps, and remember to constantly review and revise your risk assessment matrix throughout the project life cycle:
- Identify Risks: Start by looking at the entire risk landscape. That is, view the whole project and discuss things that could potentially impact the project with your team. Don’t be afraid to seek out historical data from previous projects, as well. Break down the identified risks into four categories: strategic, operational, financial and external.
- Set Risk Criteria: Once you identify risks, the next step is to determine their probability and their impact, assigning values to those variables. Risk criteria let you place the risk on the risk assessment matrix. Spend time on each decision, and get feedback from your team to make sure your placement is accurate.
- Assess Risk: Next, analyze the risk according to your risk criteria. This is a three-tier assessment; high, medium or low. The more detail, the better the analysis of the risks to your project.
- Prioritize Risk: Now that you have this data, prioritize the risks that are most dangerous to the success of the project. This is also the first step in developing a risk assessment plan and figuring out what to do if these risks occur.
Using a Risk Matrix for Qualitative Risk Analysis
A risk assessment matrix works well with qualitative risk analysis, which is a risk management technique to prioritize risk. In fact, qualitative risk analysis is what a risk matrix visualizes!
Qualitative risk analysis provides a structure to use your risk matrix within. For example, it helps you assemble a team to identify risks. Then, have the team document every risk they identify. It doesn’t matter how small or insignificant the risk might appear. It’s best to cast a wide net at this point in the risk management process. You can reevaluate later as you analyze and determine how impactful each risk could be.
Next, rate and prioritize each risk based on the likelihood it might happen. Prioritize the risk however you want, but remember—the larger the range, the more accurate the risk assessment. Now you can develop strategies to address risks if they do occur.
A risk matrix is just a visual representation of a qualitative risk analysis. Use qualitative risk analysis to fill out your risk assessment matrix and make your findings more helpful.
How ProjectManager Helps with Risk Management
ProjectManager is online project management software, which means it delivers real-time data to help you identify risk quickly when it appears in your project. The quicker you identify risk, the faster you can resolve it before it becomes a problem.
Track Risk in Multiple Project Views
The risk assessment matrix prepares you for risk, and ProjectManager gives you the tools to address it. You can gather, prioritize and assign risks on a Gantt chart, and view them on the list, calendar or kanban board view. Project data is updated across the software, so no matter which project view you’re working on, the information is current.
Collaborate in Real-Time with Your Team
Teams are often distributed, which is why ProjectManager offers collaboration features. Once an issue is worked on, team members can comment at the task level as they resolve it. Remote can work together with teams in the office. Automated notifications alert you whenever a task’s status updates to keep things moving forward quickly.
Track Risks on Intuitive Dashboards
To track progress, use our live dashboard. Data is collected and automatically calculated to display in easy-to-read charts and graphs that capture risks when they first appear. Unlike other software, ProjectManager is already set up and ready to give you instant status reports when you need them.
ProjectManager is award-winning software that helps you plan, monitor and report on risk. Our resource management tools make it simple to allocate resources and respond to issues so they’re resolved before they become problems. Get real-time data to capture risks fast and make more insightful decisions when working to resolve them. Try ProjectManager free today.