Design a risk assessment matrix by listing the risks and rate those risks for probability and impact, Management Study Guide notes. From there, the risks are classified and the decisions on the mitigating planning are outlined.Continue Reading
When beginning the risk assessment matrix, begin with a list of all risks, usually determined in a brainstorming session. Those participating provide a list that contains common categories of risks, and participants can then determine risks foreseen in each category, Management Study Guide explains.
Once participants have established the list of risks, participants list those risks by the probability of occurrence and the impact of the risk's occurrence. Score the risks, with a score of five indicating the risk's affects are extremely serious if it does occur. From there, classify the risks so that the business can focus on the risks that are priorities. The highest priority goes to risk that have high probability and high impact.
Next, are high probability and low impact risks, which may benefit from an established plan even though the risk is manageable. Low probability and high impact risk are those where the chances of the risk occurring are unlikely but if they do, the impact could be huge, so risk mitigation plans and prevention must be in place. Finally, low probability and low impact risks are generally considered insignificant, Management Study Guide explains.
The risk assessment matrix concludes with a prevention plan, a plan to correct any damage done when the risk occurs and a correction plan, trying to catch the risk before major damage occurs, notes Management Study Guide.Learn more about Business Resources