For enquiries call:
+1-469-442-0620
HomeBlogProject ManagementProbability and Impact Matrix: Example, Templates & Differences
Being a Project Manager, I wanted to write this article to share my professional experience of working on probability and impact matrix. Before getting into the core subject, let me explain to you about Qualitative Risk Analysis since risk probability impact assessment is one of the tools and techniques of Qualitative Risk Analysis.
Qualitative Risk Analysis is simply the process of prioritizing the risk based on probability of occurrence and impact, as well as other characteristics. This assists in ranking project risks by assessing their probability of occurrence and the magnitude of their potential consequences. I recommend all my mentees who are preparing for PMP certification to take Project Management certification online courses.
If you are preparing for the Project Management Professional (PMP)® exam, then you need to know about RISK impact and probability matrix.
A probability and impact matrix - a tool used in qualitative risk analysis to evaluate the probability and impact of identified risks.
PMBOK® Guide seventh edition definition of probability and impact matrix: Grid for mapping the probability of occurrence of each risk and its impact on project objectives if that risk occurs also known as risk probability and impact matrix.
| Probability | Impact |
|---|---|
| How likely the risk is to occur | What would happen if the risk materialized |
|
|
| Uncertainty Dimension | Effect Dimension |
| Very Low probability – not worth considering | Very low impact – not significant to project |
| Low Probability – unlikely to occur | Low impact – can be managed without mitigation |
| Medium probability – realistic chance of occurrence | Medium impact – may require mitigation |
| High probability – likely to occur | High impact – significant impact on cost / schedule |
| Very high probability – almost certain to occur | Very high impact – can be a “project killer” |
Let me give you simple illustrations as an example to understand better about Probability and Impact:
PMBOK® Guide provides a clear methodology for the identification of risk– the actual process of identification as described lacks any internal structure. There are several ways to identify the risk: SWOT (Strength, Weaknesses, Opportunities, and Threats) analysis, Root Cause Analysis (RCA), Affinity Diagram (KJ diagram), Brainstorming, Interviews, Checklists and Nominal Group Technique (NGT).
I would like to discuss four helpful ways in which I identify the risks in all my projects
This will help you understand my suggestions in detail. I would also like to suggest my readers take Project Management Professional course which can be a great way to enhance their career.
To calculate the probability and impact matrix, here are the suggested 4 steps you can follow:
A. Probability (Likelihood): X- axis pertains to how likely it is for the risk to occur.
B. Impact (Consequence): The Y-axis determines the level of effects that the risk can cause.
Allocating a numeric value from 1 to 5, 1 being the lowest, against each category under Probability and Impact. To calculate the Risk Level, multiply the Probability value by the Impact value using the following formula:
Probability x Impact = Risk Level
Also, I am using the below guide for the numeric values for my analysis (figure 4)
Since opportunities are evaluated like risks according to the probability impact grid, it makes sense to present both in the common chart which is called as the risk/opportunity matrix or mirror double probability.
Now, let’s explore the advantages and disadvantages of employing a Probability and Impact Matrix, providing insights into its utility and potential limitations for risk assessment and management.
There are many templates that are available for free online, and I always suggest my readers/mentees undergo detailed study on the subject by themselves or any course like PRINCE2 Foundation and Practitioner training. This has helped me to design various templates according to the requirements of the industry and projects.
Figure: 6 is one of my own templates (3X3) which I am using for various projects.
Let me explain about the Probability and Impact Matrix with a simple example.
My project is about the development of new glass doors for metro trains. During the planning stage, I did the risk analysis and found several risks which were then prioritized. The topmost risk was the availability of glasses for the doors. These glasses were specialized automotive specific and customized for this door design. Due to the complexity of the design, we ended up with only one supplier who could supply the same.
For this project, glass supplier delays are possible due to a lack of resources on their end, if a delay happens, the impact would be major because it would impact the entire project. I have categorized this risk as Medium – High based as shown in figure 7.
During my PMP® exam preparation, I discovered the significance of probability-impact risk analysis in project management. With the help of this article, I've shared my insights in a straightforward manner, elucidating the Probability and Impact Matrix with practical examples. Risks in projects can have positive or negative outcomes, and it's crucial for project managers to promptly identify and address them. Continuous learning is the key to success, and I strongly recommend considering KnowledgeHut's Project Management certification course for a comprehensive grasp of this vital domain.
Risk Probability: Determination of likelihood of a risk occurring and Impact Assessment: Evaluation of the impact of a risk if it occurs.
The three types of Matrixes in project management are Weak Matrix, Balanced Matrix and Strong Matrix.
Elimination or mitigation of risks that cause major impact to the project or product. Also understanding the impact of any action.
| Name | Date | Fee | Know more |
|---|
.png&w=3840&q=75)
.png&w=3840&q=75)
