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11 x 11 Risk Matrix

The following matrix shows an example of how three different risks are plotted on a matrix to reflect those risks' uncertainty.


For example, Risk C was assessed as having a roughly 10% likelihood of eventuating. We might have created the probability distribution using historical data, expert judgement, or a Monte Carlo Simulation.


The main point, however, is that the illustration shows that risk with a 10% likelihood of eventuating is considered most likely to generate losses equivalent to 40% to 50% of organizational equity. But it also shows a slight chance that this risk might also create a 95% loss event.


Using the x-axis to show potential consequences as a percentage of organizational equity is one way to express total loss percentages. Losing 100% (or more) of total equity would be an existential threat to the organization.


Risks that generate losses more significant than 100% of equity have equal 'consequence' ranking to 100% risks. A 500% loss event is the same outcome as a 100% or 125% loss event.


You could replace the x-axis with actual dollar amounts or equally by any risk considered as being existential. The consequence criteria for catastrophic outcomes could involve multiple deaths, massive damage to reputation, etc.



 

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