A risk impact probability matrix is used to plot what two factors?

The risk impact probability matrix is a strategic tool used in risk management to assess and prioritize potential risks. It plots two critical factors: the likelihood of a risk occurring and the impact that risk would have on the organization if it were to materialize.

The likelihood of risk occurrence indicates how probable it is that a particular risk could happen, helping organizations understand which risks might warrant closer scrutiny. On the other hand, the impact reflects the potential consequences or severity of that risk on the organization, ranging from minor disruptions to critical failures.

By analyzing these two dimensions, organizations can better allocate resources and develop mitigation strategies targeting the most significant risks, ensuring they are prepared to face uncertainties that could affect their operations and objectives. This matrix facilitates informed decision-making regarding risk management initiatives, allowing organizations to focus on the most pressing threats.