A risk assessment matrix is a helpful visual tool to identify risks, threats and vulnerabilities. Disaster recovery teams can use them to categorize threats by likelihood, potential impact, and characteristics such as financial and reputational harm.
A risk matrix template can provide a simple yet effective starting point to perform an assessment. Risk assessments can become very complex, especially with sophisticated risk algorithms at play. However, there are common factors that can shape a risk assessment matrix.
A downloadable risk assessment matrix template as well as guidelines for using it are included below. Organizations can use this template as a jumping-off point to create their own matrix.
More complex risk assessments require more detailed matrices, and there are many tools for performing risk assessments available today. The nature of the planned assessment and the level of detail to be provided will help determine the complexity of risk assessment matrix tools.
Importance of performing a risk assessment
A risk assessment can help disaster recovery teams ensure they complete a project or activity on time and within budget. This type of assessment gives organizations knowledge of situations that threaten the activity's success before it launches, as well as during the activity and even after completion.
In the course of performing an assessment, the primary metrics to identify are the likelihood of an event occurring and the impact to a project or activity if the event occurs. Many sources of risk data are available, from published risk tables to insurance risk tables to actuarial tables. Each of these resources can provide important risk data based on extensive analysis of risk events.
Why use a risk assessment matrix?
There are many factors to consider during a risk assessment. A matrix organizes risk data and other elements to help perform an assessment. A risk assessment matrix can also help organizations do the following:
- define the type of risk;
- identify assets for the assessment;
- determine the criticality of the assets;
- list the risks, threats and vulnerabilities to the assets;
- validate the effectiveness of current risk control and mitigation strategies;
- determine the criticality of identified risks;
- calculate the organizational tolerance for identified risks;
- identify potential risk mitigation strategies, technologies and methods; and
- calculate overall risk values for the organization, such as residual risk.
Applying risk matrices to different types of organizations
The risk assessment matrix template included in this article is fairly simple and straightforward, and it can apply to a variety of vertical markets.
For example, a risk assessment matrix for an organization located in a hurricane zone with backups in the cloud could look like the example in the template, with changes to the items the business assesses. As part of the data gathering, the risk team in this scenario should examine relevant weather data from the National Oceanic and Atmospheric Administration, the National Weather Service and the National Hurricane Center.
The team should also examine risk data from cloud organizations such as the Cloud Computing Association and the Cloud Security Alliance, plus the organization's cloud services provider. This data includes the number of past outages the organization has experienced and the duration of those outages.
Depending on the type of assessment, changes to the components in the matrix can be made to accommodate the specific risk requirements. Common risk assessment types include the following:
How to use the risk assessment matrix template
The risk assessment matrix template provided in this article has two parts. The first is a color-coded general risk assessment matrix. This type of matrix is widely used to codify risks based on likelihood and impact. The second part is a ready-to-use template for performing a basic risk assessment including likelihood, overall impact severity and financial impact.
Likelihood ranges from 0.0 (no likelihood of occurrence) to 1.0 (100% likelihood of occurrence). Gradations of likelihood are indicated with numerical entries to the right of a decimal point, such as 0.15 or 0.024. The same weightings are used to rate impacts from 0.0 (no impact) to 1.0 (worst possible impact). Column B is used to indicate the general severity impact and can be a standalone column. Column C denotes financial impact and shows how additional factors can produce a more realistic calculated risk factor.
The risk assessment matrix template is a simplified tool that uses assessment values ranging from 0.0 to 1.0. More detailed and complex values can be substituted. To perform an assessment using the template, take the following steps:
- List the risks, threats and vulnerabilities to be assessed in the first column.
- Insert the likelihood factor into column A for each item being assessed.
- Insert the impact factors into columns B and C.
- Multiply A x B x C to arrive at the calculated risk factor.
Once the risk factors are calculated, refer to the color-coded rating chart that follows the matrix. This provides a visual representation of the calculated risk factors, based on where the risk factor values reside from 0.0 to 1.0.
An example of a completed risk assessment matrix is included in the template to demonstrate how the process works. Risk factor ratings are arbitrary ranges that can vary by process, so be sure that management reviews and approves any metrics.