Probability and Impact Matrix

A probability and impact matrix prioritizes the combination of probability and impact scores and helps you determine which risks need detailed risk response plans. For example, a risk event with a high probability of occurring and a high impact will likely need a response plan. This matrix is typically defined by the organization, but if you don't have one, you'll need to develop this now—during your planning meeting and analysis (the tool and technique of this process). You'll use this matrix in the Perform Qualitative Risk Analysis process, and I'll talk more in depth about it in the section "Analyzing Risks Using Qualitative Techniques" later in this chapter. Again, you want to define (or modify) and document the probability and impact matrix in the risk management plan.

The key point about this process is that you'll define what the probability and impact tools look like now during Plan Risk Management so that the team has an agreed-upon basis for evaluating the identified risks later during the Perform Qualitative Risk Analysis process.

To recap, the steps associated with these last few elements of the risk management plan are as follows:

1. Define the risk categories (these will assist the risk team in the Identify Risks process).

2. Determine how probability and impact will be defined (to be used in the Perform Qualitative Risk Analysis process).

3. Develop or modify the probability and impact matrix (to be used in the Perform Qualitative Risk Analysis process).

Doing all these steps, together with the other elements of the risk management plan, gives you and the risk management team a common understanding for evaluating risks throughout the remainder of the project.

The Identify Risks process involves identifying all the risks that might impact the project, documenting them, and documenting their characteristics. Identify Risks is an iterative process that continually builds on itself. As you progress through the project, more risks might present themselves. Once you've identified or discovered a potential new risk, you should analyze it to determine whether a response plan is needed. You can see that the risk management cycle starts again with Identify Risks and progresses through the remaining risk processes to determine what to do about them.

You can include several groups of folks to help identify risks, including project team members, risk team members, stakeholders, subject matter experts, users of the final product or service, and anyone else who you think might help in the process. Perhaps in the first round of Identify Risks you could include just the project team and subject matter experts and then bring in the stakeholders or risk management team to further flesh out risks during the second round of identification. Risk events can occur at any time during the project, and all project participants should be encouraged to continually watch for and report potential risk events.

I'll talk more about the techniques you can use to identify risks in the section "Tools and Techniques for Identify Risk."

Risks might or might not adversely affect the project. Some risks have positive consequences, while others have negative consequences. However, you should identify all risk

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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