Risk matrix. Characteristics, analysis and risk assessment

The risk matrix is a special system that allows you to determine with a fairly high degree of truthfulness the probability of occurrence of risks at an enterprise in one or another area of its activity. It is very useful in planning, considering potentially profitable projects and the like elements of the work of any organization. In order to understand all the features of this tool as precisely as possible, it is necessary to understand the whole planning system, how it is implemented, why it is needed, what is being orientated, and how it operates in those or other circumstances. Understanding only one of these elements can not give a complete picture, since it is in this case that it is important to collect all information and its generalization into a single form. Only it will be able to show the situation most realistically in the context of certain events, situations, incidents and the like.

What is project risk?

Project risk is an event that can theoretically happen. In the vast majority of cases, it will lead to certain problems in the work of the enterprise. For example, the timing of the delivery of goods may not be fulfilled, its value may increase, the lot will be lost, the money paid will be depreciated, and so on. The risk profile includes a list of elements that are important for further analysis. Each of them has a clear source or cause of occurrence. In addition, they have certain consequences, in some cases particularly critical, in other situations not very significant. As a rule, all such situations are considered repeatedly throughout the implementation of a project. It should be borne in mind that there is a possibility that the occurrence of risks will be absolutely impossible to predict. The simplest example of this is the sudden start of hostilities, terrorist attacks and so on. Of course, they can not be predicted, because if at least the slightest likelihood of this exists, many companies automatically pawn a certain amount in the reserve. This helps to respond more adequately and with minimal losses to non-standard conditions, which in the end will benefit both one side of the arrangements and the other.

What is a risk matrix?

It is also called a risk map, because it looks like a grid, on which there is definite information about all probable problems. They can both exist at the time of writing, and be predictable. The risk matrix is divided into three main categories: levels, probability and consequences. Each of these points will be discussed in more detail below. This tool for assessing possible problems in many companies is the main source of information that is taken into account while considering the possibility of implementing a particular project. As a rule, based on everything specified in the matrix card, the management has the opportunity to issue the most effective and reasonable solution that can arrange both parties to the contract. That is, the employees of the company responsible for this tool are obliged to treat their own work as responsibly as possible, since their data will affect the entire development of the enterprise, the receipt of income, and so on. At the same time, if some indicators are deliberately understated and an unfavorable event leads to significant losses, they will also be liable, provided that all this could indeed be predicted.

Separation of risks by levels

All problems have a certain level of risk. So, there are 4 main varieties: low, moderate, high and extreme. The very first kind implies almost complete absence of actions, especially if all the necessary instructions have been given in advance. As a rule, it is enough to conduct a routine control check, making sure that employees really understand the situation and know how to react to it. The second, moderate level is more complicated. Usually, in order to deal with it, enough knowledge of the head of a particular unit. It is necessary to make sure that he understands the essence of the problem and is ready to bear responsibility in case of failure. This is enough to ensure that the situation is resolved in the best way without much effort. The emergence of high-level risks is indeed very important, and it is required to immediately draw the attention of senior management to the problem that has arisen. Chiefs among themselves can quickly agree and make the right decision, which can lead to minimization of losses. The latest, extreme level implies that you need to act right now, without any meetings, negotiations and the like.

Risk sharing by probability

The definition of risk is also carried out by the type of probability of its occurrence. There are five types: A, B, C, D and E. Category E - this is a kind of risk that arise extremely rarely. For this, certain conditions must be met, and the chance of such is taken into account as the least probable. Group D refers to those types of situations that are unlikely to occur. That is, everything that is possible in theory is included here, but in practice it is extremely rare. The next category is C. These are risks that are likely to arise, since this happens with some regularity, which can be roughly estimated. The penultimate group is B. It includes situations that occur more often than not. The calculation of Category A risks is very simple. It is possible to give almost 100% probability that a problem will arise. In accordance with a certain frequency of occurrence, the company will be able to respond in the right way, proactively eliminating possible problems or, if this is not possible, taking into account the consequences from their occurrence in advance.

Risk sharing on consequences

The risk and uncertainty of possible events should also be considered in terms of how critical they can be to the company. There are several basic categories of consequences, in turn, divided into three groups: health, costs and required efforts.

Table of consequences:

A detailed description is unnecessary here, since everything basic is clear from the table. We can only give a few examples. The most minor problems can be considered accidental breakdown of equipment that is not too necessary, which can be replaced quickly and with minimal time and money. There are no victims here, the cost of work is not high and the staff can do everything that is needed, with their own hands. But the most serious example, in which this characteristic of risk reaches the "catastrophic" indicator, is already a global technogenic accident in which many employees and other persons were killed, not to the enterprise in any way. Naturally, the costs in such a situation will be so incredible that it will most likely just close.

Key Features

The risk matrix implies a preliminary and consistent implementation of a number of specific actions. The first thing to be done is identification. That is, all the likely risks must be listed and determined. The next stage is a hazard assessment. Under this item, previously selected probable problems are broken down by the degree of their threat to the project, life, health and finance of the company. After this, it is necessary to think clearly about possible actions that can be aimed at minimizing harm. That is, if possible, make sure that the problem does not arise in principle. As an option, think over a scheme of reactions that will need to be implemented if the situation does arise. The last and most lengthy stage is the monitoring of implementation. If actions are meant that reduce risk and uncertainty to zero or a minimum, then they need to be checked. If this is not possible, then it will be necessary to conduct additional checks at all times or at key stages of project implementation. They will be able to identify problems in a timely manner.

Planning

This is the main process. It allows you to think through all possible options and probabilities in advance. There are no clearly established criteria for how a plan should be drawn up. Each employee chooses the optimal look and works according to his own view of the problem, provided that there is no need to correlate the work permits with other people. Approximately the same can be said about such an instrument as the risk matrix. An example of such a plan should include such elements as general information, company data, features and description of the project under consideration, as well as the goals that were set. Further, there are various sections that more accurately characterize the plan and its features. This includes methodology, organization, budget, regulations, reporting, monitoring, and so on.

Types of risks

All possible problems have several types of potential control. This is also important in order for the risk matrix to work successfully. The formula for calculating control is simple enough, on the one hand, and on the other - extensive knowledge is required, often beyond the information available to ordinary employees. Thus, the risks are divided into those that can not be controlled, it can be done in part or full control is available. The first category includes problems with the company are not related. The second group includes everything that also does not concern the enterprise, as well as some elements related to it. The latter category includes technical, legal and other similar problems directly related to the company.

Factors

Among other things, all non-standard situations have certain factors, due to which the risk profile becomes more simple and understandable. It is thanks to these elements, along with other other features and factors, planning the success of the project will be as easy as possible.

Table of factors:

Here only the main elements that can be supplemented or changed are listed, but their general essence remains the same. As a rule, this is enough for a more or less detailed view of at least a brief list of likely risks. With these factors you can start working.

Risk analysis and assessment

If you do not go into details, and consider the situation as a whole, you can see that in assessing and analyzing the risks there is nothing globally complex. It is enough to put a number of basic questions on this or that problem and it will be immediately possible to draw appropriate conclusions. Thus, the analysis and calculation of risks must begin with whether it is possible to manage a particular problem. If so, you need to develop a plan to minimize losses. If not, you need to understand how much risk is critical. If very, then it is necessary to react immediately and stop the project implementation. If not, then you just need to put the manual in prominence.

Reacting

It has already been said about how you can roughly evaluate and analyze problems. Of course, the information for the most part is of a general nature, but in more detail something can be considered only by tying itself to a specific situation and the company. After the problem is known, it requires a reaction, because the definition of risk is only the initial stage. So, after there is an understanding of the situation, it is necessary to find out what exactly became the cause of its occurrence. On the basis of this, an approximate model of dependence and influence on the problem of certain factors should be compiled. Within the framework of this, an understanding is formed of how, exactly, what moment affects the final result. Well, it already gives an opportunity to estimate approximately, what actions are necessary for changing the initial indicators, so that the probability of a risk or its consequences are minimal.

Results

All of the above information allows you to create a basic plan that will cover most likely problems. It will allow you to more accurately determine their essence, principles, stages of emergence, solutions, and so on. As experience accumulates, the employee will be able to develop this planning system, making it more and more perfect. As a result, even the most incredible problems will be taken into account, which will allow the company to clearly understand all the risks associated with a particular project.