The risk matrix has become a staple within the project risk management family of tools and techniques, especially for the more complex and highly scrutinized projects. It portrays a relatively easy-to-comprehend visual of individual project risk status. One example of a risk matrix can be found on page 84 of my book, “Project Risk Management: A Practical Implementation Approach.” I advocate a particular approach for using this matrix, one which engenders organizational communication and action which I tend to believe is essential for holistic risk management and the ultimate benefit of “doing more with less.” It should be understood throughout the organization that the risk matrix’s “Red Zone” is the organization’s established risk threshold within which individual risks cannot be tolerated for more than some short amount of time – e.g., two weeks. This is particularly important within a matrix organizational structure. A communicated risk in this zone should be considered a plea for help from the project team, and one which, if not rectified in some amicable way, will likely lead to a major issue which jeopardizes the project. This zone should accurately reflect organizational risk tolerance – which means that if a risk is outside of this Red Zone, and results in a materialized issue, the resultant consequence is acceptable to the organization’s management team. This concept should be consistently applied to all projects within the organization, thus necessitating organizational governance relative to the specifics of the tools and techniques used, as well as the criteria for determining risk severity levels.
The objective of this series of posts is to provide insights into the breadth of Holistic Project Risk Management, especially as it relates to satisfying an organization’s objective to “Do More with Less” – which, if done well will improve the organization’s business success. The plan is to provide 2 posts per week over the course of 10 weeks. Thus, there will be time in between topics to comment and/or reach out to the author for clarification or further requests. Past posts will be assembled and stored on the Build2Scale.net website for future reference.
My text book “Project Risk Management: A Practical Implementation Approach” can be purchased via the following link: