What is a risk matrix and how is it typically structured?

• A. A chart for budgeting.
• B. A tool to rate risk by likelihood and consequence, usually with axes for probability and severity and a color-coded grid.
• C. A schedule of tasks.
• D. A method to categorize by department.

Answer: (B)

A risk matrix is a visual tool used to prioritize risks by two dimensions: how likely a risk is to occur and how severe the impact would be if it does. It’s typically laid out as a grid with one axis for probability (likelihood) and the other for consequence (severity). Each identified risk is placed into the cell that matches its assessed likelihood and impact, and the cells are color-coded—often green for low risk, yellow for medium, and red for high—so you can quickly see which risks need attention. This structure helps teams compare risks on a common scale, focus mitigation efforts where they have the greatest effect, and communicate risk levels clearly to stakeholders. Matrices can vary in size (like 3x3 or 5x5) and may include residual risk or target risk bands, but the core idea remains assessing likelihood, impact, and presenting them in a color-coded grid. Other options describe budgeting, scheduling, or departmental categorization, which are not risk matrices.