Risk Matrix Template: Free Guide to Score Project Risks

Risks are a part of any project, and there's no surefire way to know which ones will occur and when. Sometimes, you'll get through an entire project without experiencing a single hiccup. Other times, you'll feel like all the odds are against you. Without a crystal ball, the only way to prevent project risks is to plan for them.

A risk matrix assigns each event a score from 1 to 25, categorizing it as high, medium, or low impact. In this article, we'll compare different matrix sizes, explore the benefits, and walk you through how to create and use a risk matrix template.

What is a risk matrix in project management?

A risk matrix is a visual tool that helps project managers assess and prioritize risks based on two factors: likelihood of occurrence and severity of impact. By plotting risks on a grid, teams can quickly identify which threats need immediate attention and allocate resources accordingly.

Types of risks

As part of the process, you'll need to brainstorm a list of project risks to chart in your risk matrix. The risks you may face will likely fall into these categories:

• Strategic risk: Strategic risks involve performance or decision errors, such as choosing the wrong vendor or software for a project.

• Operational risk: Operational risks include process errors or procedural mistakes, such as poor planning or a lack of communication among teams.

• Financial risk: Financial risk can involve various events that lead to a loss of company profits, including market changes, lawsuits, or competition.

• Technical risk: Technical risk may include any issue related to the company's technology, such as a security breach, power outage, loss of internet, or property damage.

• External risk: External risks are out of your control, like floods, fires, natural disasters, or pandemics.

There are other risk categories to consider depending on your work industry. For example, if you have government clients, then you also want to brainstorm legal risks. If your company sells a physical product, you may need to consider manufacturing risks.

Types of risk matrices: 3x3, 4x4, and 5x5

A risk matrix can be adapted to fit the complexity of your project. While a 5x5 grid is common, you might choose a simpler or more detailed version depending on your needs. The goal is to find the right balance of detail without making the process too complicated.

Here's how the three most common matrix sizes compare:

The 5x5 matrix is the most widely used format because it provides enough detail to make meaningful distinctions without overwhelming your team.

Benefits of using a risk matrix

Using a risk matrix helps your team move from reacting to problems to planning for them. It's a simple tool that offers powerful benefits for any project.

• Prioritize risks effectively. A risk matrix gives you a clear, visual way to distinguish between high-priority threats that need immediate attention and low-priority issues that can be monitored.

• Improve decision-making. With a clear understanding of potential risks, you can make more informed decisions about resource allocation, project timelines, and strategic planning.

• Enhance team communication. The matrix serves as a single source of truth for project risks, making it easier to communicate potential challenges and response plans to stakeholders and team members.

• Support planning. By identifying risks early in the planning process, you can develop mitigation strategies in advance rather than scrambling to find a solution when a problem occurs.

How to create a risk matrix template

Start by defining your severity scale, which measures how severe the consequences of each risk would be. In a 5x5 matrix, there are five levels:

• Negligible (1): The risk will have little consequence if it occurs.

• Minor (2): The consequences of the risk will be easy to manage.

• Moderate (3): The consequences of the risk will take time to mitigate.

• Major (4): The consequences of this risk will be significant and may cause long-term damage.

• Catastrophic (5): The consequences of this risk will be detrimental and may be hard to recover from.

Next, define your scale of likelihood, which measures the probability of each risk occurring:

• Very likely (5): You can be pretty sure this risk will occur at some point in time.

• Probable (4): There's a good chance this risk will occur.

• Possible (3): This risk could happen, but it might not. This risk has split odds.

• Not likely (2): There's a good chance this risk won't occur.

• Very unlikely (1): It's a long shot that this risk will occur.

When you place a risk in your matrix based on its likelihood and severity, you'll determine its level of impact. The risk impact is both color-coded from green to red and rated on a 1-25 scale.

• Low (1-6): Low-risk events likely won't happen, and if they do, they won't cause significant consequences for your project or company. You can label these as low priority in your risk management plan.

• Medium (7-12): Medium-risk events are a nuisance and can cause project hiccups, but if you take action during project planning to prevent and mitigate these risks, you'll set yourself up for project success. You shouldn't ignore these risks, but they also don't need to be a top priority.

• High (13-25): High-risk events can derail your project if you don't keep them top of mind during project planning. Because these risks are likely to happen and have serious consequences, they are most important in your risk management plan.

You don't have to stick to the labels above for your risk matrix template if they don't feel right for your company or project. You can customize the size and terminology of your matrix to your needs.

How to use a risk matrix

Once you've created a risk matrix, you can use it as a comprehensive analysis tool. The best part about a risk matrix template is that you don't need to change it for every project. Once you have one, you can reuse it and share it with others.

1. Identify project risks

You'll need a list of potential risks, often documented in a risk register, to make use of your risk matrix. In this step, you'll identify the risks that may affect the specific project you're working on.

To identify relevant risks for your project, you'll need to understand your project scope and objectives. This includes the project's:

• Timeline

• Budget

• Resources

• Constraints

Using your project scope as a guide, identify common project risks that might affect your work. If you're not sure where to start, try brainstorming techniques like mind mapping or starbursting to list as many risks as you can under each risk type.

2. Determine severity of risks

When you created your risk matrix, you defined the criteria for your risk severity and likelihood. Now that you have a list of project risks, categorize them using the matrix criteria. Start with the scale of severity and go through each risk you've listed. Consider the following questions:

• What is the most negative outcome that could come from this risk?

• What are the worst damages that could occur from this risk?

• How hard will it be to recover from this risk?

• Which of the five severity levels most closely matches this risk?

You may not always have the perspective you need to know how severe the consequences of a risk are. In that case, work with other project stakeholders to determine the potential risk impact.

3. Identify likelihood of risks

Once you've defined the severity of each risk, you've completed half of the risk analysis equation. Next, identify the likelihood of each risk. To do this, consider the following questions:

• Has this risk occurred before and, if so, how often?

• Are there risks similar to this one that have occurred?

• Can this risk occur, and if so, how likely is it to occur?

Team collaboration is also crucial at this step because you may not have a clear understanding of similar risks that have occurred in past projects. Make sure to reference past projects and analyze the probability of each risk with your team in order to create a more accurate mitigation plan.

4. Calculate risk impact

The last part of your risk analysis equation is to calculate risk impact. The equation you'll use is:

Likelihood x severity = risk impact

Place each risk in your matrix based on its likelihood and severity, then multiply the numbers in the row and column where it lands to find the level of risk impact. For example, if you think the risk of a data breach is of major severity (4) and probable likelihood (4), you'd multiply four by four to get a risk impact of 16. This is considered a high-risk impact.

5. Prioritize risks and take action

You should now have a risk impact level on a scale of 1-25 for each risk you've identified. With these number values, it's easier to determine which risks are of top priority. When you have risks with the same risk impact score, it will be up to you and your team to determine which risk to prioritize.

Your risk response plan should include steps to prevent risk and ways to mitigate risk if unfortunate events occur. Because so much goes into project planning, the best strategy when tackling risks may be to divide and conquer.

Risk assessment matrix template

The size of your risk matrix determines how closely you can analyze risks. A larger matrix offers more room on the impact spectrum, while a smaller one keeps ratings simpler. At a minimum, your matrix should be 3x3.

A 5x5 risk matrix is ideal for most projects. It creates a larger color spectrum to visualize each risk as high, medium, or low. The example below shows a 5x5 risk matrix template:

You can download a free risk matrix template using the link below. Use this template to chart your project risks and determine their overall impact.

Pair your risk matrix template with a work management tool

You can reuse the same risk matrix template across multiple projects. However, the risks you face will evolve as technology, your environment, and your workplace change. Reevaluate your risks regularly to keep your assessments relevant.

When you pair your risk matrix template with work management software, you can use past data to inform current processes. Asana helps you share the results of your risk matrix with stakeholders so you can collaborate on a risk management plan. Get started and turn your risk assessment into a clear action plan.

Frequently asked questions about risk matrices