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The Probability and Impact Matrix
What is a Probability and Impact Matrix? Well, it’s part of your qualitative risk analysis. It’s a grid for mapping the probability of each risk occurrence, and its impact on your project objectives if that risk occurs.
We ask, “What is the probability of it happening?” Maybe it’s 70 percent for example. And what’s the impact if that actually happens? Is it high, is it low? By giving it a rating, it allows project risks to be allocated into priority groups. So is it a high priority? Is there a high probability and a high impact? Then we probably want to be focusing on that, and the low ones we can maybe leave for later.
Using a Probability and Impact Matrix
So first of all, both opportunities and threats are rated, so we do want to find the strengths and our weaknesses of our project. And things like descriptive terms could be used if you want to – so it might have a “high impact”, medium, low, very low. Or more common is numeric values, where a 5 might be a high, and a 1 might be a low for example.
The reason we use numbers is if numbers are used they can be multiplied to give a probability impact score for each risk, and that’s a great way to prioritize those risks. Here’s an example of a probability of impact Matrix. As you can see, we’ve got the probability on one side, and its actually given descriptive terms and numbers just so you can see the difference. So we’ve got very low and very high, or 0.1 to 0.9. And then the impact as a negative impact for threats, or a positive impact for opportunities, and those are multiplied together to give us the outcome.
As you can see, we’ve got the high impact and high probability up in the top right, and low impact and low probability in the bottom left. And that’s the way that they’re prioritizing in this particular probability and impact matrix. Of course, you can lay it out in any way that you choose as long as you’re following those general guidelines that will help you the most during the qualitative analysis of the risks of your project.
And that is the Probability and Impact Matrix for reviewing Risk.
– David McLachlan