When it comes to assessing potential risks, a Risk Assessment Matrix is an essential tool for any organization. This matrix is designed to help organizations quickly and easily identify, analyze and prioritize risks associated with a project or specific process. The matrix is based on the concept that all risks should be assessed in terms of both their likelihood of occurring and their potential impact on the organization.
Risk assessment matrices are typically composed of a two-dimensional grid: one axis represents the probability of an event occurring, and the other axis represents the magnitude or severity of its impact. Organizations assign each risk an overall risk rating by plotting its position within this grid in order to prioritize which ones they will address first. It also allows them to identify areas where additional controls may be needed in order to reduce exposure and minimize losses resulting from those identified risks.