A black and white drawing of a rock formation.

Being risk-conscious is not just about protecting a business from unfavorable events — it helps you stay ahead by making fine-tuned tactical choices. A recent PwC survey also noted that 81% of businesses that quantify risks see better productivity and more time to focus on strategic initiatives.

If you want to reap these benefits, visualizing your risk posture through a risk assessment matrix (RAM) is ideal. It’s a popular risk quantification mechanism, with many organizations using it for grading, prioritizing, and managing risks. 

This guide outlines the different types of matrices you can use for specific scenarios. You’ll also learn how to create a risk matrix from scratch in a few simple steps.

What is a risk assessment matrix?

A risk assessment matrix is a grid-based, typically color-coded visualization of the potential risks an entity faces, graded against the likelihood of each risk scenario as well as the impact of its consequences. The matrix presents each risk alongside its allocated numerical value, giving decision-makers a convenient bird’s-eye view of risks.

How does a risk assessment matrix work?

A risk matrix supports the measurement of risks across two dimensions:

  • Likelihood/probability (X-axis)
  • Impact/severity (Y-axis)

For any risk event, you have to quantify each of these two factors to calculate its final risk score and place it in the matrix accordingly. Typically, scores within a specific risk grade are color-coded. For example:

  • Low risk — Green
  • Medium risk — Orange
  • High risk — Red

When done, you’ll have an at-a-glance view of risks that makes prioritization and mitigation easier.

What are the types of risk assessment matrices you can use?

Depending on the number of levels you add to categorize each dimension/axis, you can have several types (sizes) of risk matrices, such as:

  • 3x3
  • 5x5
  • 7x7

Many risk experts consider 5x5 matrices a sweet spot. They’re not too complex to set up while still being detailed enough to let an organization define precise levels of risk acceptability, including negligible and extreme risks. However, you can stick to a smaller 3x3 matrix in the following scenarios:

  • You don’t have sufficient data to develop granular scales and criteria.
  • You’re assessing smaller, low-impact risks that won’t require in-depth analyses.
  • You’re new to risk assessments and want to start with a basic setup.

As your risk management processes mature, you can consider using more elaborate matrices like 7x7. Bigger matrices require a great deal of precision and abundant data, so it’s best suited for complex projects or larger organizations that need to analyze sensitive risks.

Another way to classify risk matrices is according to the type of risk you’re assessing, such as vendor and supplier, legal, or third-party risk. It’s a good idea to create dedicated matrices for different risk categories, as doing so ensures comprehensive coverage of your risk landscape.

Benefits of using a risk assessment matrix

One of the main advantages of a risk assessment matrix is that it enables the quantification of business risks according to a tailored scaling system. Other benefits include:

  • Easier risk prioritization: Qualitative risk assessments can be highly subjective, where certain team members might consider specific risks more or less severe than they actually are. A risk matrix promotes objectivity by providing a more data-driven and quantitative overview of your risk posture, which allows you to group and prioritize risks effectively.
  • Real-time monitoring: Risk matrices are updated periodically to account for newer risks, outdated threats, or changes in impact levels. The ongoing monitoring and fresh scoring offer real-time insights that help keep your risk posture relevant.
  • Improved implementation of compliance standards: Risk assessments are essential requirements of many compliance standards (e.g., ISO 27001), and a risk matrix helps you conduct them more accurately.
  • Strategic risk responses: Once risks are placed in the appropriate segments of the matrix, fine-tune your risk management strategy to develop specific remediation plans. You can also see which events call for the most resources, ensuring you don’t waste them on negligible or tolerable risks.
  • Better team alignment: Risk matrices help stakeholders, including employees, understand risks better, which allows them to calibrate their actions with more clarity.

{{cta_withimage4="/cta-modules"}}

Five steps to creating and using a risk assessment matrix

To create an effective risk assessment matrix, you need to take the following steps:

  1. Identify risks
  2. Determine the likelihood of each risk occurring
  3. Assess the impact of each risk
  4. Assign a risk score
  5. Map out and prioritize risks

Step 1: Identify risks

Before you can quantify risks through a matrix, you must define your entire risk landscape. The best way forward is to hold brainstorming sessions with relevant stakeholders (like department heads) to get their input.

Some of the main categories of risks you may want to identify are outlined in the following table:

Category Definition
Operational risks Potential for losses caused by issues in internal processes or systems.
Cybersecurity risks Potential for loss or harm related to technical infrastructure or the use of technology within an organization.
External risks Potential for harm triggered by uncontrollable events outside of an organization’s control or purview.
Compliance risks Potential for threats to an organization’s reputation or legal standing due to the failure to comply with industry standard compliance frameworks and regulations.
Strategic risks Potential of significant business disruption caused by failed strategic decisions or plans.

After you gather the necessary data, organize the risk scenarios in a centralized document like a risk register.

Step 2: Determine the likelihood of each risk occurring

Once you’ve identified your risk list, it’s time to define the first risk matrix criterion — likelihood or probability. We recommend defining a scale that aligns with your preferred matrix size. The number of levels in your scale will determine the size of your matrix.

Imagine you’re assessing a minor project-specific risk that doesn’t have an organization-level impact. Because of the limited assessment scope, your scale can have three levels for a 3x3 matrix:

  • Unlikely
  • Possible
  • Likely

For more sensitive risks, however, it’s ideal to expand the scale to five levels and create a 5x5 matrix, such as:

  • Highly unlikely
  • Unlikely
  • Possible
  • Likely
  • Highly likely

Consider adding percentage/probability ranges here so that you can further quantify your risk’s likelihood of occurring.

Once the scale is defined, determine the likelihood of each risk and grade it accordingly. Assign numerical values to levels (e.g., 1–5), as doing so will help you calculate the final risk score in later steps.

Step 3: Assess the impact of each risk

After determining the likelihood of a risk occurring, you need to define the second criterion — i.e., the impact a realized risk event could have on your organization. You can outline a custom scale depending on your risk profile. Assuming you choose a 5x5 matrix, here’s a sample impact scale with five levels:

  • Negligible
  • Low
  • Moderate
  • High
  • Catastrophic

Aim to add numerical values here as well so that you can weigh the risks in clear terms, preferably using quantifiable metrics like revenue or customer loss.

Determining a risk’s tangible impact isn’t always simple, though. You’ll sometimes have to account for risks that aren’t as easily quantifiable (e.g., reputation damage). In such cases, experts advise collecting input from high-level stakeholders or risk consultants.

Step 4: Assign a risk score

If you’ve assigned numerical values to a risk’s likelihood and impact, calculating the risk score is easy — all you need to do is multiply the two. Here’s the formula:

  • Risk score = Likelihood x Impact

Repeat the calculation for every item in your risk register and simultaneously record the values for easy plotting in the next step.

In some cases, you may want to introduce additional weights to the equation for a more precise risk score. For example, you can add double weightage to a risk that has both financial and operational implications. While this might complicate the assessment process, it could be worth the effort when you’re dealing with highly complex or sensitive risk scenarios.

Step 5: Map out and prioritize risks

After you’ve assigned final scores to risks, the last step is to map them out in the matrix based on predetermined ranges. Then, color-code the matrix to simplify visual navigation.

Keep in mind that risk ranges aren’t universal — it all comes down to your organization’s risk appetite. For example, if you use a 5x5 matrix, you can describe the overall risk levels within the following ranges:

  1. Low: 1–4
  2. Medium: 5–9
  3. High: 10–17
  4. Extremely high (or critical): 18–25

It’s possible to have more than four risk levels, depending on how deep and complex you want your risk calculation and measuring models to be.

Once you define the final risk levels, you can use the matrix to highlight the most pressing risks and areas for improvement.

Let’s understand the plotting process through an example. Let’s say you’re in the medical industry and have taken various precautions to protect patient data. You may determine that a breach is unlikely and give it a likelihood score of 2. Still, the consequences of such a breach would be catastrophic, so the impact score is 5. As a result, the overall risk level is (5 x 2) or 10, which translates to a “high” category risk. Since the likelihood is already low, you can mitigate the risk by taking steps to reduce the potential impact of the breach.

{{cta_simple1}}

Why continuous tracking of your risk assessment matrix is crucial

Your organization's risk landscape evolves constantly, so your risk matrices need to follow suit. Revisit your matrices at predefined intervals to account for external and/or internal changes — the cadence depends on the volatility of your risk space.

Tracking risk matrices is especially important when executing risk mitigation strategies through intricate internal controls and security programs. Updated risk scores help you evaluate the efficacy of your measures and implement changes to tackle new risks.

You can review your risk matrices either internally or with the help of third-party assessors. Whatever you choose, make sure to collaborate with key stakeholders in your organization across departments to ideate on risk scenarios. Finally, designate someone to sign off and make the changes official.

A common setback many organizations face is that continuous risk tracking becomes laborious and time-consuming. This is true especially if the process is full of inefficiencies, such as manually calibrated matrices, evidence-gathering through screenshots, or tracking updates through endless email threads.

The good news is that you don’t need to put up with scattered and inefficient risk assessment processes anymore. With the right risk management platform, you can streamline and retain complete control over your risk assessment workflows.

Simplify risk assessment and management with Vanta

Vanta is a robust Trust Management Platform offering functionalities that streamline GRC processes. The platform’s comprehensive Risk Management solution gives you a centralized hub for assessing, tracking, and managing risks. You can also utilize AI and automation to enhance operational predictability with minimal manual work.

With Vanta, you can create a color-coded risk assessment matrix with a few clicks. By default, the platform helps score risks for likelihood and impact on a scale of 1–5. However, you can use custom categories and scoring options to build a tailored matrix. Access several other features to support your risk assessment team, such as:

  • Automated risk scoring and prioritization
  • Pre-built content for 50+ common risk scenarios
  • Customizable risk register
  • Real-time tracking of risk scenarios
  • Risk mitigation suggestions and controls linking
  • Risk assessment reports and time-specific snapshots for evidence collection

The platform lets you auto-update your risk policy to sync with any change in the scoring parameters. You can also explore over 300 integrations with popular platforms to boost productivity and free up more time for high-value work.

Vanta’s Risk Management solution leverages the ISO 27005 risk assessment guidelines by default and helps you stay compliant with 20+ frameworks and standards, including SOC 2 and ISO 27001 — explore the product page for more details.

You can also schedule a custom demo and get a more personalized experience for your team.

{{cta_testimonial8="/cta-modules"}}

Risk

A comprehensive guide to using a risk assessment matrix

A black and white drawing of a rock formation.

Being risk-conscious is not just about protecting a business from unfavorable events — it helps you stay ahead by making fine-tuned tactical choices. A recent PwC survey also noted that 81% of businesses that quantify risks see better productivity and more time to focus on strategic initiatives.

If you want to reap these benefits, visualizing your risk posture through a risk assessment matrix (RAM) is ideal. It’s a popular risk quantification mechanism, with many organizations using it for grading, prioritizing, and managing risks. 

This guide outlines the different types of matrices you can use for specific scenarios. You’ll also learn how to create a risk matrix from scratch in a few simple steps.

What is a risk assessment matrix?

A risk assessment matrix is a grid-based, typically color-coded visualization of the potential risks an entity faces, graded against the likelihood of each risk scenario as well as the impact of its consequences. The matrix presents each risk alongside its allocated numerical value, giving decision-makers a convenient bird’s-eye view of risks.

How does a risk assessment matrix work?

A risk matrix supports the measurement of risks across two dimensions:

  • Likelihood/probability (X-axis)
  • Impact/severity (Y-axis)

For any risk event, you have to quantify each of these two factors to calculate its final risk score and place it in the matrix accordingly. Typically, scores within a specific risk grade are color-coded. For example:

  • Low risk — Green
  • Medium risk — Orange
  • High risk — Red

When done, you’ll have an at-a-glance view of risks that makes prioritization and mitigation easier.

What are the types of risk assessment matrices you can use?

Depending on the number of levels you add to categorize each dimension/axis, you can have several types (sizes) of risk matrices, such as:

  • 3x3
  • 5x5
  • 7x7

Many risk experts consider 5x5 matrices a sweet spot. They’re not too complex to set up while still being detailed enough to let an organization define precise levels of risk acceptability, including negligible and extreme risks. However, you can stick to a smaller 3x3 matrix in the following scenarios:

  • You don’t have sufficient data to develop granular scales and criteria.
  • You’re assessing smaller, low-impact risks that won’t require in-depth analyses.
  • You’re new to risk assessments and want to start with a basic setup.

As your risk management processes mature, you can consider using more elaborate matrices like 7x7. Bigger matrices require a great deal of precision and abundant data, so it’s best suited for complex projects or larger organizations that need to analyze sensitive risks.

Another way to classify risk matrices is according to the type of risk you’re assessing, such as vendor and supplier, legal, or third-party risk. It’s a good idea to create dedicated matrices for different risk categories, as doing so ensures comprehensive coverage of your risk landscape.

Benefits of using a risk assessment matrix

One of the main advantages of a risk assessment matrix is that it enables the quantification of business risks according to a tailored scaling system. Other benefits include:

  • Easier risk prioritization: Qualitative risk assessments can be highly subjective, where certain team members might consider specific risks more or less severe than they actually are. A risk matrix promotes objectivity by providing a more data-driven and quantitative overview of your risk posture, which allows you to group and prioritize risks effectively.
  • Real-time monitoring: Risk matrices are updated periodically to account for newer risks, outdated threats, or changes in impact levels. The ongoing monitoring and fresh scoring offer real-time insights that help keep your risk posture relevant.
  • Improved implementation of compliance standards: Risk assessments are essential requirements of many compliance standards (e.g., ISO 27001), and a risk matrix helps you conduct them more accurately.
  • Strategic risk responses: Once risks are placed in the appropriate segments of the matrix, fine-tune your risk management strategy to develop specific remediation plans. You can also see which events call for the most resources, ensuring you don’t waste them on negligible or tolerable risks.
  • Better team alignment: Risk matrices help stakeholders, including employees, understand risks better, which allows them to calibrate their actions with more clarity.

{{cta_withimage4="/cta-modules"}}

Five steps to creating and using a risk assessment matrix

To create an effective risk assessment matrix, you need to take the following steps:

  1. Identify risks
  2. Determine the likelihood of each risk occurring
  3. Assess the impact of each risk
  4. Assign a risk score
  5. Map out and prioritize risks

Step 1: Identify risks

Before you can quantify risks through a matrix, you must define your entire risk landscape. The best way forward is to hold brainstorming sessions with relevant stakeholders (like department heads) to get their input.

Some of the main categories of risks you may want to identify are outlined in the following table:

Category Definition
Operational risks Potential for losses caused by issues in internal processes or systems.
Cybersecurity risks Potential for loss or harm related to technical infrastructure or the use of technology within an organization.
External risks Potential for harm triggered by uncontrollable events outside of an organization’s control or purview.
Compliance risks Potential for threats to an organization’s reputation or legal standing due to the failure to comply with industry standard compliance frameworks and regulations.
Strategic risks Potential of significant business disruption caused by failed strategic decisions or plans.

After you gather the necessary data, organize the risk scenarios in a centralized document like a risk register.

Step 2: Determine the likelihood of each risk occurring

Once you’ve identified your risk list, it’s time to define the first risk matrix criterion — likelihood or probability. We recommend defining a scale that aligns with your preferred matrix size. The number of levels in your scale will determine the size of your matrix.

Imagine you’re assessing a minor project-specific risk that doesn’t have an organization-level impact. Because of the limited assessment scope, your scale can have three levels for a 3x3 matrix:

  • Unlikely
  • Possible
  • Likely

For more sensitive risks, however, it’s ideal to expand the scale to five levels and create a 5x5 matrix, such as:

  • Highly unlikely
  • Unlikely
  • Possible
  • Likely
  • Highly likely

Consider adding percentage/probability ranges here so that you can further quantify your risk’s likelihood of occurring.

Once the scale is defined, determine the likelihood of each risk and grade it accordingly. Assign numerical values to levels (e.g., 1–5), as doing so will help you calculate the final risk score in later steps.

Step 3: Assess the impact of each risk

After determining the likelihood of a risk occurring, you need to define the second criterion — i.e., the impact a realized risk event could have on your organization. You can outline a custom scale depending on your risk profile. Assuming you choose a 5x5 matrix, here’s a sample impact scale with five levels:

  • Negligible
  • Low
  • Moderate
  • High
  • Catastrophic

Aim to add numerical values here as well so that you can weigh the risks in clear terms, preferably using quantifiable metrics like revenue or customer loss.

Determining a risk’s tangible impact isn’t always simple, though. You’ll sometimes have to account for risks that aren’t as easily quantifiable (e.g., reputation damage). In such cases, experts advise collecting input from high-level stakeholders or risk consultants.

Step 4: Assign a risk score

If you’ve assigned numerical values to a risk’s likelihood and impact, calculating the risk score is easy — all you need to do is multiply the two. Here’s the formula:

  • Risk score = Likelihood x Impact

Repeat the calculation for every item in your risk register and simultaneously record the values for easy plotting in the next step.

In some cases, you may want to introduce additional weights to the equation for a more precise risk score. For example, you can add double weightage to a risk that has both financial and operational implications. While this might complicate the assessment process, it could be worth the effort when you’re dealing with highly complex or sensitive risk scenarios.

Step 5: Map out and prioritize risks

After you’ve assigned final scores to risks, the last step is to map them out in the matrix based on predetermined ranges. Then, color-code the matrix to simplify visual navigation.

Keep in mind that risk ranges aren’t universal — it all comes down to your organization’s risk appetite. For example, if you use a 5x5 matrix, you can describe the overall risk levels within the following ranges:

  1. Low: 1–4
  2. Medium: 5–9
  3. High: 10–17
  4. Extremely high (or critical): 18–25

It’s possible to have more than four risk levels, depending on how deep and complex you want your risk calculation and measuring models to be.

Once you define the final risk levels, you can use the matrix to highlight the most pressing risks and areas for improvement.

Let’s understand the plotting process through an example. Let’s say you’re in the medical industry and have taken various precautions to protect patient data. You may determine that a breach is unlikely and give it a likelihood score of 2. Still, the consequences of such a breach would be catastrophic, so the impact score is 5. As a result, the overall risk level is (5 x 2) or 10, which translates to a “high” category risk. Since the likelihood is already low, you can mitigate the risk by taking steps to reduce the potential impact of the breach.

{{cta_simple1}}

Why continuous tracking of your risk assessment matrix is crucial

Your organization's risk landscape evolves constantly, so your risk matrices need to follow suit. Revisit your matrices at predefined intervals to account for external and/or internal changes — the cadence depends on the volatility of your risk space.

Tracking risk matrices is especially important when executing risk mitigation strategies through intricate internal controls and security programs. Updated risk scores help you evaluate the efficacy of your measures and implement changes to tackle new risks.

You can review your risk matrices either internally or with the help of third-party assessors. Whatever you choose, make sure to collaborate with key stakeholders in your organization across departments to ideate on risk scenarios. Finally, designate someone to sign off and make the changes official.

A common setback many organizations face is that continuous risk tracking becomes laborious and time-consuming. This is true especially if the process is full of inefficiencies, such as manually calibrated matrices, evidence-gathering through screenshots, or tracking updates through endless email threads.

The good news is that you don’t need to put up with scattered and inefficient risk assessment processes anymore. With the right risk management platform, you can streamline and retain complete control over your risk assessment workflows.

Simplify risk assessment and management with Vanta

Vanta is a robust Trust Management Platform offering functionalities that streamline GRC processes. The platform’s comprehensive Risk Management solution gives you a centralized hub for assessing, tracking, and managing risks. You can also utilize AI and automation to enhance operational predictability with minimal manual work.

With Vanta, you can create a color-coded risk assessment matrix with a few clicks. By default, the platform helps score risks for likelihood and impact on a scale of 1–5. However, you can use custom categories and scoring options to build a tailored matrix. Access several other features to support your risk assessment team, such as:

  • Automated risk scoring and prioritization
  • Pre-built content for 50+ common risk scenarios
  • Customizable risk register
  • Real-time tracking of risk scenarios
  • Risk mitigation suggestions and controls linking
  • Risk assessment reports and time-specific snapshots for evidence collection

The platform lets you auto-update your risk policy to sync with any change in the scoring parameters. You can also explore over 300 integrations with popular platforms to boost productivity and free up more time for high-value work.

Vanta’s Risk Management solution leverages the ISO 27005 risk assessment guidelines by default and helps you stay compliant with 20+ frameworks and standards, including SOC 2 and ISO 27001 — explore the product page for more details.

You can also schedule a custom demo and get a more personalized experience for your team.

{{cta_testimonial8="/cta-modules"}}

Webinar: Scaling your GRC program with automation and AI

Learn how to automate compliance processes, strategies to streamline risk assessments and ways to use automation and AI on vendor security reviews.

Webinar: Scaling your GRC program with automation and AI

Learn how to automate compliance processes, strategies to streamline risk assessments and ways to use automation and AI on vendor security reviews.

Webinar: Scaling your GRC program with automation and AI

Learn how to automate compliance processes, strategies to streamline risk assessments and ways to use automation and AI on vendor security reviews.

Role:GRC responsibilities:
Board of directors
Central to the overarching GRC strategy, this group sets the direction for the compliance strategy. They determine which standards and regulations are necessary for compliance and align the GRC strategy with business objectives.
Chief financial officerPrimary responsibility for the success of the GRC program and for reporting results to the board.
Operations managers from relevant departmentsThis group owns processes. They are responsible for the success and direction of risk management and compliance within their departments.
Representatives from relevant departments
These are the activity owners. These team members are responsible for carrying out specific compliance and risk management tasks within their departments and for integrating these tasks into their workflows.
Contract managers from relevant department
These team members are responsible for managing interactions with vendors and other third parties in their department to ensure all risk management and compliance measures are being taken.
Chief information security officer (CISO)Defines the organization’s information security policy, designs risk and vulnerability assessments, and develops information security policies.
Data protection officer (DPO) or legal counselDevelops goals for data privacy based on legal regulations and other compliance needs, designs and implements privacy policies and practices, and assesses these practices for effectiveness.
GRC leadResponsible for overseeing the execution of the GRC program in collaboration with the executive team as well as maintaining the organization’s library of security controls.
Cybersecurity analyst(s)Implements and monitors cybersecurity measures that are in line with the GRC program and business objectives.
Compliance analyst(s)Monitors the organization’s compliance with all regulations and standards necessary, identifies any compliance gaps, and works to mitigate them.
Risk analyst(s)Carries out the risk management program for the organization and serves as a resource for risk management across various departments, including identifying, mitigating, and monitoring risks.
IT security specialist(s)Implements security controls within the IT system in coordination with the cybersecurity analyst(s).

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