Last version published: 09/09/2022 13:04
Publication number: ELQ-46101-3
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Risk (Likelihood-Consequence) Assessment Matrix Template
A project risk analysis matrix template in PowerPoint for project managers, business analysts to identify critical & major risks in need of protective measures.
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When evaluating a project's feasability or assessing the risks in the acquisition of a firm in M&A, conducting a risk assessment is highly recommended to limit the potential negative impacts of pre-identified risks.
The "Risk Matrix" (or "Risk diagram"), according to Garvey & Lansdowne (1998), was created in the Electronic System Centre of the US Air Force. It's overall simplicity, compact approach and pertinence, has made it one of the most popular semi-quantitative risk assesment frameworks in many industries, leading to multiple spin-offs and more complex versions.
The gist of the framework is to correctly assess each identified risk (identifying risks could be a whole seperate exercise), on two dimensions:
- 💥 Severity (of consequences): the degree to which the occurence of the risk would negatively impact the project ->Very Low, Low, Average, High, Very High
- ％ Probability (of occurence): the likelihood of the event (risk) actually happenning and possibly negatively impacting (to various degrees), your project ->Almost Certain, Likely, Possible, Unlikely, Rare.
The combination of Severity x Probability = Level of Risk 📊 😱
Here are the different levels of Risks available (and associated combinations Severity-Probability):
- CRITICAL (6): Very High - Almost Certain, Very High - Likely, Very High - Possible, High - Almost Certain, High - Likely, Average - Almost Certain.
- MAJOR (8): Very High - Unlikely, Very High - Rare, High - Possible, High - Unlikely, Average - Possible, Average - Likely, Low - Almost Certain, Low - Likely.
- MODERATE (5): Very Low - Almost Certain, Very Low - Likely, Low - Possible, Average - Unlikely, High - Rare.
- MINOR (5): Very Low - Possible, Very Low - Unlikely, Low - Unlikely, Low - Rare, Average - Rare.
- INSIGNIFICANT (1): Very Low - Rare
CRITICAL and MAJOR risks absolutely need to have associated protective measures (Insurance, recovery plans, security measures, fall-back strategies etc.), enabling to hedge (or in the best case scenarios offset), the negative consequences of the risks actually happening.
Given the pertinence and popularity of this risk assessment matrix framework, I decided to use it in a large Project Audit at a SaaS software company I worked for. The corresponding slide was well appreciated given its ability to quickly outline the critical and major risks associated to the project.
Hence, I decided in my free time to create a universal Risk (Likelihood-Consequence), or Risk (Probability-Severity) PowerPoint template for any project manager, business analyst or M&A professional to use when conducting and wanting to present their risk assessment in a compact visual format.
The Best Practice is:
- 2 editable Microsoft PowerPoint Template Slides (1 Matrix Slide + 1 Table with details for each risk)
- with an online & offline 14 step-by-step methodology, with pedagogical illustrations for each step.
- 1 anonymous example for a projet for a SaaS company
Should you have any questions about this top tier Project Risk Management framework template, you're welcome to reach out to me via Private Message.
More resources on the risk analysis matrix:
- What is a Risk Matrix? by microtool:https://www.microtool.de/en/knowledge-base/what-is-a-risk-matrix/
- Risk Matrix: What is it and should you use one? by ideagen: https://www.ideagen.com/thought-leadership/blog/risk-matrix-what-is-it-and-should-you-use-one
- What is a Risk Assessment Matrix in Project Management, by Wrike: https://www.wrike.com/blog/what-is-risk-matrix/#What-is-a-risk-assessment-matrix-in-project-management
- The Carver Method, by Harvard Business Review: https://hbr.org/2018/09/a-6-part-tool-for-ranking-and-assessing-risks
- Other ressources on Risk Managment and Risk Matrix on Science Direct: https://www.sciencedirect.com/topics/engineering/risk-matrix
⭐️ Bundle of 23 Commercial Due-Diligence Model Templates (including this one): https://www.eloquens.com/tool/QQ2gHk3J/strategy/due-diligence-templates/m-a-mergers-acquisitions-commercial-due-diligence-cdd-models-templates-and-frameworks-bundle
This Best Practice includes
1 PowerPoint Template Model + 1 Associated Excel Model + 1 Offline/Online 14 Step-by-Step Methodology + 1 Example
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