Risk Management Matrix
Suggestions for Using the Matrix Why use a risk management matrix? The risk management professionals at Victor and CNA believe that a matrix provides you with a systematic approach to analyzing and assessing risks. This matrix is designed to help you identify and quantify risks and then describe the techniques available to manage those risks. When properly implemented, a matrix can help individual members of the same firm address risk management from a common perspective. Completing the Matrix The basic structure of the matrix corresponds to the fundamental four-part approach to risk management: identification, assessment, response, and control. Each title box identifies the basic categories of risk inherent in most projects: client, project, consultants, contractor, other parties, fee, your firm, and contracts. Client-related issues are identified and assessed first because the majority of claims (more than 60% each year) are brought by clients. The bold subtitles identify specific types of issues within each broad category. We have identified some of the more risk-intensive issues—in other words, those previously demonstrated to start or aggravate claims. This matrix can be customized for individual firms and for each project. The description under the subtitle contains details on the issues we have defined. Step 1: Assessment Moving to the first column, risk is first assessed quantitatively. We think it will be beneficial to rank each risk identified on a scale from 1 to 10—1 signifying a very low-risk issue and 10 signifying a very high-risk issue. Using the numeric scale should enable a summary of the intensity of the risk when analyzing the project as a whole because risk intensity “scores” from each category can be added up. However, please feel free to develop your own system—perhaps a simpler “low,” “medium,” and “high” scale. Over time, you will find the rating system that works best for you. Step 2: Firm Analysis The second column permits you to take the risk assessment further. We believe the best use of this column is to view it as an opportunity to clarify your response in the preceding column by adding any notes, questions, or concerns you may have about each issue. Few issues are simple enough to be categorized effectively using only a quantitative scale.
43 • From Risk to Profit - Benchmarking and Claims Studies
Victor
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