##### Asked by: Emilee Galassi

asked in category: General Last Updated: 12th April, 2020# What is probability and impact?

**Probability and Impact**Matrix is a tool for the project team to aid in prioritizing risks. For example, a risk with a high

**probability**/ likelihood of occurring and which will have a high

**impact**on the project objectives will likely need a response plan.

Thereof, what is risk probability and impact?

In **risk** analysis, **risk** is traditionally defined as a function of **probability and impact**. The **probability** is the likelihood of an event occurring and the consequences, to which extent the project is affected by an event, are the **impacts** of **risk**.

One may also ask, how do you calculate risk impact? For businesses, technology **risk** is governed by one **equation**: **Risk** = Likelihood x **Impact**. This means that the total amount of **risk** exposure is the probability of an unfortunate event occurring, multiplied by the potential **impact** or damage incurred by the event.

One may also ask, what is the difference between risk and impact?

You will be told that the **Risk** is an event that may or may not happen. You will also be told that **Impact** is what will happen if the **Risk** occurs (or 'eventuates').

How do you create a probability and impact matrix?

**How to Create a Probability Impact Matrix**

- Determine the Data to Use.
- Decide on the Size of Your Matrix.
- List Events to Include in the Risk Matrix.
- Gather Impact and Probability Data.
- Enter Impact and Probability Data.
- Determine How to Categorize Impact Data.
- Determine How to Categorize Probability Data.
- Draw the Outlines of the Probability-Impact Risk Matrix.