What is a risk matrix?

A risk matrix is a tool designed to categorize and evaluate risks based on their likelihood of occurrence and the potential impact they could have on an organization. By plotting risks on a matrix, which typically consists of a grid with likelihood on one axis and impact on the other, organizations can prioritize risks and determine which ones need immediate attention or mitigation strategies. This visualization helps stakeholders understand the severity and probability of various risks, guiding decision-making and resource allocation to manage those risks effectively.

The other options do not accurately represent the purpose of a risk matrix. While a formula for calculating financial losses or methods for conducting interviews may play a role in risk management or assessment, they do not provide the categorization and prioritization structure that a risk matrix is specifically designed to offer. Similarly, an organizational chart for risk managers does not pertain directly to the assessment or management of risks; instead, it outlines the hierarchy and roles within the risk management function.