MSG Team's other articles

8769 Planning Functionality of an ERP System – Setting up of Planning Engine

In customer centric business environment, it is critical to have an effective plan to manage production capacity, materials availability and shipment schedules. The planning functionality of an ERP system provides organizations the means of meeting such customer centric approach. Planners are able to simulate alternate scenario planning wherefrom they determine which assemblies and components to […]

10771 Production Module – Production Planning and Control

To support the need to reduce cost and time to market, greater emphasis is needed to control shop floor activities. Well-organized manufacturing process, resulting elimination of bottleneck and waste, necessitates greater reliance upon flexible and user friendly production planning and control system. The planning engine of an ERP system, through closed loop MRP/MRP II capability, […]

10593 Going From People Driven To Process Driven

A process driven organization has certain obvious advantages over a people driven organization. Many old fashioned entrepreneurs still prefer to be people driven for the fear of losing control over their organization. However a large majority still aims as process oriented as the ultimate way to create an organization. Many have tried and failed because […]

12400 The Bangladesh Growth Story

Historically, Bangladesh has been one of the most impoverished regions in Asia. The 1971 war of independence left Bangladesh with a huge financial deficit. The end result was that the country was facing extreme poverty and famine for many years after their independence. Even before the independence, West Pakistani politicians would often call Bangladesh (then […]

9440 ERP – General Ledger and Accounting Management

Financial accounting module of an ERP package provides company wide control and integration of financial information. This module provides the ability to centrally track financial accounting data within a framework of multiple companies, languages and currencies. The General Ledger (GL) module is the heart of finance package of an ERP system. Through integration with logistics, […]

Search with tags

  • No tags available.

The Project Risk Assessment Matrix is one of the required documents to complete the Define phase of the DMAIC methodology.

The procedure has been designed in such a way to ensure that people implementing the project have given a thought to what can possibly go wrong and begin thinking of mitigation plans.

Here is a step by step review of how to prepare the Project Risk Assessment Matrix:

  1. Step 1: List down the Risks
  2. The first step in the process begins with the listing down of all the risks that the participants can think of. This is usually done in a brainstorming session.

    Participants are typically given a list which contains common categories of risks. The participants are then advised to think of whatever risk they can foresee in the project category by category. This is done over and over again to ensure that the list is exhaustive.

  3. Step 2: Rate for Probability and Impact
  4. Once the list of the possible risks that a project may face is available, the next step is to rate the risks.

    The risks are rated on two parameters viz. probability of occurring and impact of occurring.

    In both cases the score is given out of 5, with 5 being certainty that the risk will occur or have a very high impact if they do occur. The scores are then multiplied and then arranged in a descending order.

  5. Step 3: Classify the Risks
  6. All risks are not equally important from the six sigma project point of view. Hence they need to be classified and efforts need to be focussed only on the ones that are priority. There is usually a standard matrix that classifies the risks into the following 4 categories based on the parameters:

    • High Probability & High Impact: These risks are considered show-stoppers and are the priority of any mitigation plan.

    • High Probability & Low Impact: These are standard risks, mitigation plans are advised because of high frequency but the impact is low and manageable

    • Low Probability & High Impact: These are called the black swans. The chances of these events occurring are almost zero. However if these events do occur, they have a huge impact on operations. Mitigation plans must be in place. Prevention must be the first option.

    • Low Probability & Low Impact: These risks are considered insignificant. This is because it is unlikely that they will occur. Even if they do occur, the damage done is minimal. Hence they are not the focus of mitigation plans.

  7. Step 4: Decide on Mitigation Planning
  8. There are three basic strategies which help mitigate risks successfully. They are:

    • Prevention: These plans try to ensure that the risk event cannot take place. This is advisable for the high impact risks.

    • Correction: These plans try to catch the risks early before too much damage has been done. Early signalling is the crux of these plans. However the characteristic difference is the attempt to minimize the impact.

    • Warning: Here too the emphasis is on detecting the risk as early as possible. However the element of correction is not present.

Article Written by

MSG Team

An insightful writer passionate about sharing expertise, trends, and tips, dedicated to inspiring and informing readers through engaging and thoughtful content.

Leave a reply

Your email address will not be published. Required fields are marked *

Related Articles

Step 1: Collect and Review Primary Information

MSG Team

Step 4: Develop a Business Case for your Project

MSG Team

Project Charter – Meaning, Importance and its Elements

MSG Team