Risk Assessment Template

About the Risk Assessment Template

A risk assessment matrix can help you figure out how to prioritize project or product-related risks based on likelihood and potential business impact.

The risk matrix can help you set client expectations by building trust and transparency before the project kick-off, mentally preparing your internal project team for dealing with future risks, and prioritizing what you need to do to manage risks and resources.

A risk assessment template means you don’t need to start from scratch for every project and means you stay consistent in how you identify and evaluate business risks.

What is a risk assessment?

In business, “risk” has a very specific meaning. A risk is anything that might make the actual profits from an investment come out lower than the expected profits.

There are many kinds of risk, and you can’t avoid all of them. Some risk is internal, but some derives from outside circumstances you can’t control. Inefficiencies on your staff pose a risk, but so can your customer base, your competitors, the economy at large, and even natural hazards like bad weather.

Every investment involves risk. Therefore, if you want to make money, you have to take on some level of risk. The key is to anticipate each potential risk and plan for them before they hit.

A risk assessment matrix is a simple framework you can use to help you plan your project or product development cycle. The grid format helps you control the amount of risk you’re likely to face during the project by visualizing and quantifying it.

Risks are likely to develop when a business pivots to a new product or service or needs to operate in an unfamiliar market. An assessment matrix helps teams put a framework in place to find out what the risks are likely to be and develop strategies to manage or stop these risks altogether.

Generally, a risk assessment quantifies risks in terms of “likelihood x severity.” A risk that’s highly unlikely may not be worth directing resources toward, even if its consequences would be very severe. In the same way, a very likely risk with minor consequences will be a low priority for mitigation.

Risks can be ranked according to low probability and severity (1, color-coded green) to the highest possible likelihood and severity (10, color-coded red). Ranking each risk lets you and your team prioritize risks and tackle the biggest threats with a strong action plan.

What types of risks could your business face?

We mentioned above that an organization could face multiple kinds of risk each time it makes an investment. Risks break down into four overall categories.

• Operational risk is risk that comes from within your organization. Untrained people, insufficient staff capacity, security risks, and costly procedural bottlenecks are all examples of operational risk. Since it comes from your own choices, operational risk is the easiest type to mitigate, provided you can see it coming.

• Economic risk is the risk of an investment failing because of circumstances in the economy at large. The most common example is a stock market crash reducing the buying power of your customers and lowering revenues. But economic risk can also happen on the supply side, such as a labor-friendly market forcing you to offer higher salaries.

• Strategic risk comes from your competitors. Your returns may be unexpectedly low because another company in your space offered a better product. You can mitigate this by cultivating a close relationship with your customers.

• Regulatory risk comes from the governments of the nations where you do business. Government regulations may make it impossible for you to profit from a project.

The template offers a non-restrictive framework you can use to discuss all four major types of risk, plus any other risks that don’t fit neatly into a category.

What types of risk assessment can you perform?

Just as there are multiple types of risk, there are also multiple varieties of risk assessment. These categories aren’t silos — one type of assessment can fall into more than one category.

• A qualitative risk assessment determines the likelihood of the risk using the assessor’s experience and knowledge of the potential hazard. Qualitative risk assessments can be done quickly without a strict framework.

• A quantitative risk assessment assigns numbers to the likelihood and severity of each risk. The numerical ratings allow the assessor to sum up risks at a glance.

• A generic risk assessment analyzes the risks of an activity or investment in any context where it might occur. You can use generic risk assessments as the basis for more targeted assessments later on.

• A site-specific risk assessment analyzes risk in a particular context. This can be anything from health and safety hazards on a job site to the economic risks of offering your product in a certain territory.

• A dynamic risk assessment is performed in real-time while the risk is unfolding. It’s most common in jobs with physical risk but can also apply to a developing business situation.

You can use our template to conduct all five types of assessment in the risk management process just by changing accessible settings. For example, sticky notes can easily be assigned numerical values for a quantitative assessment.

When to use a risk assessment

Before you plan a risk assessment, your project needs a strong foundation. Make sure you define your project's scope with project management methodologies, optimize your team workflows with planning frameworks, and outline your team’s roles and responsibilities.

Risk can take many forms. Project and product managers need to become comfortable labeling risk based on risk levels and likelihood. A risk assessment can help you figure out if you need to:

• Avoid the risk: If this is a high-impact, highly likely event or situation, it may be worth investing more budget or efforts to avoid the risk as soon as possible.

• Transfer or share the risk: If a risk has a big impact but is less likely to happen, it might make sense to move responsibility to a third party (such as a legal team or insurance plan). The risk can also be shared among different teams or company groups.

• Mitigate the risk: This approach tries to lower both the impact and likelihood of the risk. It happens in consultation with your leadership team or experts hired to consult with your business.

• Accept the risk: If an event is low risk and has a low probability, it may be safe for your team to simply accept that it may happen and move on.

Whether you’re kicking off a new project or developing a new project or service, there are many internal and external risks that you’ll need help predicting and controlling. Analyzing and measuring risk by ranking each type on a visual risk assessment tool gives you the opportunity to plan the best response.

Create your own risk assessment

Making your own risk assessment is easy. Miro’s whiteboard tool is the perfect canvas to create and share them. Get started by selecting the Risk Assessment Template, then take the following steps to make one of your own.

1. Decide how granular your risk assessment needs are. A simple risk assessment framework offers three risk levels: low (coded as green or 1), medium (coded as yellow or 2), or high (coded as red or 3). A more detailed framework can extend to a description of extreme (not just high) risks and increase its numeric scale up to 20. Add new rows and grids as needed.

2. Figure out the type of risk your team is dealing with. The level of risk depends on what category the risk itself is. Is your risk strategic, organizational, financial, market- or technology-related? Whatever category it may be, add a sticky note to clarify where exactly the risk sits.

3. Identify the risk criteria and rank the risk accordingly. Your matrix will help assess the potential risk according to its likelihood and impact. There may be other criteria that are useful to consider, such as risk speed and the organization’s vulnerability to threats. Whatever you decide, it’s important to reach a consensus as a team. Try Miro’s Voting Plugin to quickly agree on which criteria make the most sense for the current business climate.

4. Assess the risks. Analyze your risks according to color codes (green to yellow to orange to red) and numeric scales. Discuss the probability and business impact of each potential risk. From here, your team can move on to coming up with an action plan. Remember to repeat the matrix process a few times a year to adapt to the changing risk landscape.

5. Consider emergency response plans. These can be helpful in case you’re wrong about the likelihood or severity of a high-rated risk.