1. What is Risk Probability and Impact Matrix?

The Risk Probability and Impact Matrix is a fundamental tool in risk management that helps organizations quantify and prioritize risks based on their likelihood of occurrence and potential consequences. It provides a systematic approach to evaluating and comparing different risks.

2. How Does the Calculator Work?

The calculator uses the risk score formula:

Where:

• \( Probability \) — Likelihood of risk occurrence (0-100%)
• \( Impact \) — Severity of consequences (1-5 scale)

Risk Level Classification:

• Low Risk (0-0.39): Minimal impact, acceptable risk
• Medium Risk (0.4-0.79): Moderate impact, requires monitoring
• High Risk (0.8-5.0): Significant impact, requires immediate action

3. Importance of Risk Assessment

Details: Proper risk assessment enables organizations to make informed decisions, allocate resources effectively, and implement appropriate mitigation strategies. It helps prevent potential losses and ensures business continuity.

4. Using the Calculator

Tips: Enter probability as a percentage (0-100%) and impact on a scale of 1-5, where 1 represents minimal impact and 5 represents catastrophic impact. Ensure both values are within valid ranges for accurate calculation.

5. Frequently Asked Questions (FAQ)

Q1: What is the difference between probability and impact?
A: Probability refers to how likely a risk is to occur, while impact measures the severity of consequences if the risk materializes.

Q2: How should I determine the impact scale?
A: Use a consistent scale: 1=Negligible, 2=Minor, 3=Moderate, 4=Major, 5=Catastrophic. Define criteria for each level based on your organization's context.

Q3: What is an acceptable risk score?
A: Acceptable risk levels vary by organization and context. Generally, scores below 0.4 are considered acceptable, while scores above 0.8 require immediate attention.

Q4: How often should risk assessments be updated?
A: Risk assessments should be reviewed regularly (quarterly or annually) and whenever significant changes occur in the business environment or operations.

Q5: Can this matrix be used for all types of risks?
A: While versatile, some risks may require specialized assessment methods. This matrix works well for most operational, financial, and strategic risks.