A key step in the risk management process is prioritising risks. Describe how risks can be prioritised. 

 

Risk prioritization involves the identification of risk events, assessing their impacts and their probability of them taking place. They are then processed to get a most to least -critical rank order. The major reason for prioritizing risks is to be able to allocate resources. Below is a step process that helps to create project risk matrix so as to prioritize the events of risks:

Step-by-step explanation

1.Identify

It is the same as is recognizing a risk. Here before any assessment is done, every potential risk to a project is listed and this includes even events that have a small opportunity of taking place.

2.Measurement of likelihood

Every risk listed should be ranked according to level of its likelihood of occurring and the ranking scale can be derived by the project team members. It can be a range of 1-5 with 5 being likely to happen and 1 being unlikely to occur or even rank in terms of percentages. Every risk should be weighed and discussed with the stakeholders.

3.Assessing the impact

By using the similar procedure in measuring likelihood, the impact of each risk should be ranked. However, it should be noted that the impact of the risks can change all through the project

4.Get the overall calculated risk

With the measure used to determine the likelihood and impact of the risks, a formula can be agreed to calculate the overall risk associated with a certain happening. From there risks can be weighed based on low, medium or high and from these the team can know which risks are priorities. If many of the risks are high the team should revisit them and re-rank them. The main purpose of the matrix is to determine where to channel the mitigation efforts.