Risk Matrix

Summary

This precedent risk matrix is also known as a risk scorecard. It defines and provides suggested scores for the component parts of risk, probability and impact. This precedent contains practical guidance and drafting notes. There is a widely accepted definition of risk, i.e., risk = impact x probability. So, for each risk identified and categorized, consider two questions: If that risk materialized, how bad would it be – what the impact is, and how likely it is that the risk will materialize – what the probability is. To formulate an effective risk register, one must first identify the risks the organization faces. It is also helpful to have an understanding of the organization's appetite for risk. For a sample risk management policy, see Risk Management Policy. For a full discussion of the features usually included in a risk management policy, see the practice note: Risk Management Policy Formulation. For more information on how to manage the legal risks faced by organizations, ...