As an entrepreneur or business leader, working out the risks your business faces is critical to planning for the future and ensuring you are ready when disaster strikes. A “risk matrix” is a tool designed to help in this scenario as it allows you to plot and compare the likely risks your business faces and therefore establish a hierarchy of threat.
Here is our guide to creating and using risk matrices to help you prepare for the threats that could scupper your business.
“Don’t be fearful of risks. Understand them, and manage and minimize them to an acceptable level.”
Managing risk in your business is absolutely critical for developing it to success. Knowing exactly which threats are really relevant and which will help any leader to develop strategy and prepare for the worst eventualities. One of the simplest and most useful ways of determining the greatest risks to a business is through developing a “risk matrix”, otherwise known as a “risk assessment matrix”. Risk matrices give leaders a visual way of understanding the risks in their business by plotting these risks on a grid.
An example to illustrate…
Let’s illustrate the concept with the help of an example. A catering company has identified three risks to its business and has plotted them on a typical matrix which looks like this –