Probability consequence matrix12/30/2023 ![]() This then begs the question (using Legal/Contractual as an example): The difficulty with Consequence Matrices such as these lies in the interpretation of what is, primarily, descriptive guidance. Operations – Loss of a critical infrastructure component or stoppage of operations. People – Severe injuries, loss of life Public perception – Medium-term sense of insecurityĮnvironment – Significant and non-repairable impact Operations – Significant damage to infrastructure, major minor idle time/ Public perception – Marked and sustained interest, concern expressed Įnvironment – Uncontained but repairable impact off site People – Disability/ies/severe injury/ies Operations – Minor damage to infrastructure, resulting in an organisational slowdown / minor idle time. Public perception – Interest raised, no marked concern, public image untarnished Įnvironment – Uncontained but repairable impact on site People – Injury/ies resulting in work stoppage, no disability Operations – Minor damage, potential slowdown of operations. People – Injury/ies requiring first aid, no disability, no lost employee time No injuries, damage, environmental or operational impact. In my observation, most organisations recognise that there are multiple consequences for each risk, and utilise a matrix that details the consequences for multiple impact areas – as shown below: Level Using such a matrix makes it almost impossible, in my opinion, to get a comprehensive understanding of the full range of impacts should the risk materialise. Minor issue of little concern to community Public Safety, Environment, Lifestyle, Economy, Public Administration Some simplified consequence matrices provide one statement for each consequence level as shown below: Assessing Consequences Rating We then compare this risk level against a pre-determined criteria to evaluate whether the risk is acceptable at its current level or whether further treatment may be warranted. We identify our risk and the Consequence Matrix provides a comparative tool that allows us to determine the expected consequence level should the risk materialise. So, let’s start with the purpose of the Consequence Matrix. There are also inadequacies in the current approach to assessing consequence level. I discussed in Risk Tip #1 what I believe to be the shortcomings with the current approach to assessing Likelihood. “Standard” Consequence MatricesĮvery organisation with a risk management program is likely to have a Likelihood Rating Matrix a Consequence Rating Matrix and a matrix that is used to determine the level of risk. ![]() This has led me, once again, to question the current wisdom relating to an aspect of risk management – that being the development of the consequence matrix. It means that is it absolutely critical that when developing our Likelihood and Consequence criteria that there is enough granularity contained within to enable a more considered consensus. We use the judgement and the experience of those conducting the risk assessment to determine likelihood and consequence but, ultimately, it is just that – a judgement What I mean by that is that it is not an exact science – there is no right or wrong answer. determining the likelihood and consequence for a risk), the best you can ever hope for is a consensus. In my courses, I highlight that when it comes to risk assessment (i.e. In this blog, I focus on the other element of the assessment process – the parameters against which we estimate the consequence of a risk should it materialise. How can we estimate the likelihood of a risk such as explosion at fuel storage depot using frequency or probability when it is the effectiveness of the controls that is going to determine whether it will occur or not? In Risk Tip #1 I addressed the issue of likelihood and how difficult, if not impossible, it is to assess likelihood based on frequency when the overriding consideration as to how likely it is that a risk will occur is the strength of the controls. This blog isn’t about how to assess consequence, but more importantly, what to assess it against. The third in my risk tip series is one that has arisen from my observations of consequence matrices over the last few years. ![]()
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