Risk Matrix- with regards to the Oluwil Project

The risk matrix is a methodology used in project managements to identify, define and characterize
the probable causes of risk in a project. These are called “Risk factors”. The severity or amount of
risk of each cause is then analyzed and represented graphically. This is a useful tool used for
decision making.
“Risk” can be statistically calculated by using the product of two variables;
- The severity of the damage / harm resulted by the risk factor
- The likelihood of the risk factor to occur

Accordingly the risk matrix can be graphically represented as below;

Severity

Negligible Marginal Critical Catastrophic

Likelihoo Improbabl
Low Medium Medium High
d e

Possible Low Medium High Extreme

Probable Medium High High Extreme

The risks can then be classified as Low Risks, Medium Risks, High Risks or Extreme Risks.
Therefore the below risks were identified with relation to this particular project. They are listed below
then graphically represented according to the matrix. It should be noted that the weight of the risk
factor would be calculated according to the severity as well as the likelihood.
Therefore the major internal as well as external risk factors are as follows;

1. Possibility of a Tsunami occurrence

2. Currency Fluctuation
3. Soil Erosion
4. Sand Accumulation (Sand banks)
5. Political impact on Project
6. Inability to approve loans / currency flow
7. Improper logistical / procurement flow
8. Nonstandard feasibility study
9. Nonstandard environmental study
 10. Decline of demand for port

The above risk factors are graphically represented as below;

Severity

Negligible Marginal Critical Catastrophic

Likelihoo Medium
d Improbabl Possibility of a
Low Medium High
e
Tsunami
occurrence

Extreme
Medium
High
Inability to
Nonstandard approve loans
Currency
Possible Low environmental Fluctuation
study Nonstandard
Improper logistical / feasibility study
Decline of
procurement flow
demand for port

Extreme
High
Sand
Probable Medium High Soil Erosion Accumulation
(Sand banks)
Political impact

The risk factor which was classified as above can then be allocated a specific action plan in relation to
the project and a suitable mitigation strategy in general is assigned as below.

Accordingly if the risk is;

1. Low – the risk level is considered “Acceptable” and the suitable action plan is considered as
“Acceptable to proceed”
2. Medium - the risk level is considered “Alarp” and the suitable action plan is considered as
“Take Mitigation Efforts”
3. High - the risk level is considered “Generally Unacceptable” and the suitable action plan is
considered as “Seek Support”
4. Extreme- the risk level is considered “Intolerable” and the suitable action plan is considered
as “Place Event on Hold”