Risk Matrix

Metadata

• Name: risk-matrix
• Description: Risk identification and prioritization framework
• Triggers: risk matrix, risk assessment, risk analysis, risk prioritization

Instructions

You are a risk manager analyzing risks for $ARGUMENTS.

Identify, assess, and prioritize risks to inform mitigation strategy.

Framework

Risk Assessment Dimensions

Impact (Significance)

• High: Major financial loss, strategic damage, regulatory issue
• Medium: Moderate financial impact, operational disruption
• Low: Minor impact, easily absorbed

Controllability

• Manageable: Within our control
• Mitigatable: Can reduce but not eliminate
• Non-controllable: External, must accept

The 2×2 Risk Matrix

                        IMPACT
                    HIGH         MEDIUM        LOW
                  ┌───────────┬───────────┬───────────┐
           HIGH   │ CRITICAL  │  ACCEPT   │  ACCEPT   │
                  │  ⚠️⚠️⚠️   │    ✅     │    ✅     │
  CONTROLLABILITY │ Monitor & │  Manage   │  Monitor  │
           MEDIUM │  Mitigate │           │           │
                  ├───────────┼───────────┼───────────┤
           LOW    │ TRANSFER  │  MANAGE   │  IGNORE   │
                  │  🔸       │    ⚠️     │    ⚪     │
                  │ Insurance │ Conting.  │  Watch    │
                  └───────────┴───────────┴───────────┘

Risk Categories

Category	Examples
Financial	Cost overrun, currency, credit
Operational	Supply chain, technology, people
Strategic	Competition, market shift, regulation
Reputational	Brand damage, PR crisis
Compliance	Regulatory, legal, ethical
Environmental	Natural disaster, climate

Output Format

## Risk Matrix: [Project/Initiative/Decision]

### Scope

**Subject:** [What's being analyzed]
**Context:** [Background]
**Time Horizon:** [Planning period]

---

### Risk Identification

| ID | Risk Category | Risk Description | Trigger Event |
|----|---------------|------------------|---------------|
| R1 | Financial | [Description] | [What would cause this] |
| R2 | Operational | [Description] | [What would cause this] |
| R3 | Strategic | [Description] | [What would cause this] |
| R4 | Compliance | [Description] | [What would cause this] |
| R5 | Reputational | [Description] | [What would cause this] |
| R6 | Environmental | [Description] | [What would cause this] |

---

### Risk Assessment Matrix

| Risk | Impact | Controllability | Financial Impact | Probability | Priority |
|------|--------|-----------------|------------------|-------------|----------|
| R1 | High | Low | $X M | 30% | 🔴 Critical |
| R2 | High | Medium | $Y M | 20% | 🔴 Critical |
| R3 | Medium | High | $Z M | 40% | 🟡 Manage |
| R4 | Medium | Medium | $W M | 50% | 🟡 Manage |
| R5 | Low | Low | $V M | 10% | 🟢 Accept |
| R6 | Low | High | $U M | 60% | 🟢 Accept |

---

### Visual Matrix

                  IMPACT
          HIGH           MEDIUM          LOW
        ┌─────────────┬─────────────┬─────────────┐
  HIGH  │  R1 🔴      │  R3 🟡      │  R5 🟢      │
        │  [Name]     │  [Name]     │  [Name]     │

CONTROLL-│ │ │ │ ABILITY │ R2 🔴 │ R4 🟡 │ R6 🟢 │ MEDIUM│ [Name] │ [Name] │ [Name] │ │ │ │ │ LOW │ [Empty] │ [Empty] │ [Empty] │ │ │ │ │ └─────────────┴─────────────┴─────────────┘

Legend: 🔴 Critical - Must address immediately 🟡 Manage - Active monitoring and mitigation 🟢 Accept - Monitor only

---

### Risk Details & Mitigation

#### 🔴 Critical Risks

**R1: [Risk Name]**
- **Description:** [What could happen]
- **Trigger:** [What would cause it]
- **Impact if realized:** $X M / [Other consequences]
- **Probability:** X%
- **Current controls:** [What's in place]
- **Mitigation strategy:** [What to do]
- **Owner:** [Who's responsible]
- **Residual risk:** [Risk after mitigation]
- **Cost of mitigation:** $Y

**R2: [Risk Name]**
- [Same structure]

---

#### 🟡 Managed Risks

**R3: [Risk Name]**
- **Description:** [What could happen]
- **Trigger:** [What would cause it]
- **Impact if realized:** $X M
- **Probability:** X%
- **Monitoring plan:** [How we'll track]
- **Contingency:** [What we'll do if it happens]
- **Owner:** [Who's responsible]

[Continue for all managed risks]

---

#### 🟢 Accepted Risks

**R5: [Risk Name]**
- **Description:** [What could happen]
- **Impact if realized:** $X M
- **Why accepted:** [Rationale]
- **Monitoring:** [Basic tracking]

[Continue for all accepted risks]

---

### Risk Response Summary

| Risk | Response Type | Action | Owner | Status |
|------|---------------|--------|-------|--------|
| R1 | Mitigate | [Action] | [Name] | ⏳ In progress |
| R2 | Transfer | Insurance/Contract | [Name] | ⏳ In progress |
| R3 | Mitigate | [Action] | [Name] | ⏳ In progress |
| R4 | Accept | Monitor | [Name] | ✅ In place |
| R5 | Accept | Monitor | [Name] | ✅ In place |
| R6 | Accept | Monitor | [Name] | ✅ In place |

**Response Types:**
- **Mitigate**: Reduce probability or impact
- **Transfer**: Insurance, contracts, outsourcing
- **Accept**: Acknowledge and monitor
- **Avoid**: Change plan to eliminate risk

---

### Risk Register

**Total Risk Exposure:** $X M (weighted by probability)
**Critical Risks:** 2 (require immediate action)
**Managed Risks:** 2 (active monitoring)
**Accepted Risks:** 2 (monitor only)

**Risk Trend:** Increasing / Stable / Decreasing
**Risk Capacity:** $Y M available to absorb
**Headroom:** $Z M

---

### Early Warning Indicators

| Risk | Leading Indicator | Threshold | Current | Status |
|------|-------------------|-----------|---------|--------|
| R1 | [Metric] | [Value] | [Actual] | 🟢 OK |
| R2 | [Metric] | [Value] | [Actual] | 🟡 Watch |
| R3 | [Metric] | [Value] | [Actual] | 🟢 OK |

---

### Next Steps

**Immediate (This Week)**
1. [Action for R1]
2. [Action for R2]

**Short-term (This Month)**
1. [Action for R3]
2. [Set up monitoring]

**Ongoing**
1. Monthly risk review
2. Quarterly reassessment
3. Update as conditions change

Tips

• Focus on material risks - don't list everything
• Be specific about triggers and impacts
• Quantify financial impact where possible
• One risk owner per risk
• Distinguish between inherent and residual risk
• Update regularly - risks change
• The process matters as much as the matrix
• Don't over-mitigate - some risk is acceptable

References

• ISO 31000:2018 - Risk Management Guidelines
• COSO Enterprise Risk Management Framework
• Hubbard, Douglas. The Failure of Risk Management. 2009.