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Concept
Risk matrix
Summary
A risk matrix is a matrix that is used during risk assessment to define the level of risk by considering the category of probability or likelihood against the category of consequence severity. This is a simple mechanism to increase visibility of risks and assist management decision making.
Risk is the lack of certainty about the outcome of making a particular choice. Statistically, the level of downside risk can be calculated as the product of the probability that harm occurs (e.g., that an accident happens) multiplied by the severity of that harm (i.e., the average amount of harm or more conservatively the maximum credible amount of harm). In practice, the risk matrix is a useful approach where either the probability or the harm severity cannot be estimated with accuracy and precision.
Although standard risk matrices exist in certain contexts (e.g. US DoD, NASA, ISO), individual projects and organizations may need to create their own or tailor an existing risk matrix. For example, the harm severity can be categorized as:
Catastrophic: death or permanent total disability, significant irreversible environmental impact, total loss of equipment
Critical: accident level injury resulting in hospitalization, permanent partial disability, significant reversible environmental impact, damage to equipment
Marginal: injury causing lost workdays, reversible moderate environmental impact, minor accident damage level
Minor: injury not causing lost workdays, minimal environmental impact, damage less than a minor accident level
The probability of harm occurring might be categorized as 'certain', 'likely', 'possible', 'unlikely' and 'rare'. However it must be considered that very low probabilities may not be very reliable.
The resulting risk matrix could be:
The company or organization then would calculate what levels of risk they can take with different events. This would be done by weighing the risk of an event occurring against the cost to implement safety and the benefit gained from it.
Official source
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