Risk Value Matrix
The Risk Value Matrix provides a method of organizing opportunities based on the end value of each and the risk involved. By carefully determining which risks are worth taking and which are not, the matrix user can save himself money, time, and effort that may have been lost by making the wrong decisions.
At a very high level, the Risk Value Matrix is used in the context of business, project management.
What is the Risk Value Matrix?
A visual explanation is shown in the image above. The Risk Value Matrix can be described as a matrix with the following quadrants:
- High Value; Low Risk: Contains the actions that will be highly beneficial and involve only small risk.
- High Value; High Risk: Contains the actions that will be highly beneficial but involve big risk.
- Low Value; Low Risk: Contains the actions that will not be very beneficial but involve only small risk.
- Low Value; High Risk: Contains the actions that will not be very beneficial and involve high risk.
What is the purpose of the Risk Value Matrix?
Have you ever become overwhelmed with opportunities which you aren't certain whether or not you should pursue? In many areas of life, especially business management, this can often be the case. In times like these, it is absolutely necessary to find a method for determining which actions should be taken and which should be rejected. It may seem like one should always take an opportunity, but the truth is that some may involve far too many risks- more than it is worth!
The Risk Value Matrix assesses each action, keeping in mind the value of that action and the risks involved if it were to be chosen. Its use is simple!
- Actions that are of a high value and involve low risk should always be chosen.
- Actions that are of a high value and involve high risk and actions should be analyzed to determine whether or not they should be chosen. These may be worth your time, but they may also be dangerous.
- Actions that are of a low value and involve low risk are everyday tasks. These are neither extremely beneficial or dangerous.
- Actions that are of a low value and involve high risk should never be chosen. These are too dangerous and not worth your time.
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What templates are related to Risk Value Matrix?
The following templates are categorized as business, project management and are therefore related to Risk Value Matrix: Gap Analysis Matrix, Kraljic Matrix, Outsourcing Matrix, PICK Matrix, Quadrant Analysis, Risk Analysis Matrix, TOWS Analysis Matrix, Innovation Management Matrix. You can browse them using the menu above.
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