When implementing Project Management solutions I am often in discussion with Project Teams and Managers in how to control and identify Risks within the Projects at various levels.  Commonly we have reliable methods to control scheduling and communications but don’t manage the Project in relation to key objectives and associated Risks. Using a Risk Score Matrix can easily and quickly highlight discussion points for the Project Review Board.

Measures of Risk

There are many ways within project risk management that we can measure risk. Most commonly, this can be a simple metric to highlight the Risk and could be input by the Project Manager.  In addition it can be considered as a combination of factors.  For example, the illustration below shows how a Risk can be evaluated based on its Impact (consequence) and it’s Probability (likelihood).

Project Risk Score Matrix

The scoring can be based on multiple levels and doesn’t have to be measured to 5 levels – 3 may suffice for most organisations.

However, based on the above risk score matrix, we can grade the risks as follows:

Project Risk Scores

However you score risk, the same principle applies.

• What is the likelihood of the Risk occurring?
• What is the consequence of the Risk occurring?
• Give each element a score and you can indicate the Risk Measure

Project Risk Management Benefits

Throughout my experience, there are a number of benefits that are easily realised by businesses through project risk management coupled with an effective Risk Scoring Matrix.  Most commonly these include:

• Greater probability of achieving organisational objectives
• Provide a transparent and uniform process for the management of risk
• The information is recorded and audited
• Quick and effective means of formally recording risks
• Demonstrates your organisation’s ability to manage risk

Why not join the discussion, let me know with a comment how you manage project risks and how you define your Project Risk Score Matrix?.

David Livingstone

My experience has been gained through implementing Financial Management, Workflow, and Project Management software. My aim is to share this experience and to communicate with implementers and users of software solutions particularly in relation to an organisation’s management of it’s Resources and Projects. All feedback is welcome.