Six Sigma Key Strategies: Risk Management Matrix

Business can be risky. But without risk, where’s the payoff? All of history’s greatest leaders, entrepreneurs, and successful people have taken risks, so don’t be afraid to walk out on the ledge. Don’t let risky business hold you back. You can take control of risk using a risk management matrix. But what is a risk management matrix? That is the question. Our answer: a risk management matrix is a risk assessment tool used to define risk. It judges risk according to the probability or likelihood of an accident versus the severity of such an accident. Moreover, risk management matrices are incredibly simple processes with strong advantages. You can also maximize your awareness of risks while aiding management in decision making. Today, we go over everything you need to know about the risk management matrix. Learn how you can make smarter decisions with this Six Sigma tool.

Defining Risk Management

Six Sigma comprises a wide array of tools for making process improvement changes, eliminating waste and defect, as well as increasing efficiency. One of its most effective and useful tools is the risk management matrix. But how do we define what it does? Well, firstly, we need to agree on what risk management means. This is the process by which a company (yours, for instance) evaluates the risk associated with certain actions. Risk management is an essential business tool that enables organizations to push for strategic opportunities. After all, if you don’t try, how do you expect to succeed?

Tools like the risk management matrix allow you to take a data-driven approach to improving your processes. Especially when combined with Six Sigma. Green and Black Belts will use risk management matrices on improvement projects, to judge the validity of changes and the likelihood of success. It pays to take the time to get your facts straight before you jump into something. Using Six Sigma risk management, you can make smarter decisions based on a strong data-driven analysis of your circumstances.

Creating Your Own Six Sigma Risk Management Matrix

All it takes to create your risk management matrix is a pen, paper, and a little imagination. Imagine you want to estimate the level of risk for a specific event. A common accident, for example, such as slipping and falling or something as serious as a car crash. Furthermore, you can calculate this by taking the probability of the accident and multiplying it by the severity of harm associated with it. Before you can do this, though, it’s important to set out your measurements.

Categorize the severity of harm, from least to most severe, as either of the following. Catastrophic (involving multiple deaths). Critical (a single death or multiple serious injuries). Marginal (a single serious injury with multiple minor ones). Or negligible (a single minor injury). You should rate the probability of harm occurring as either, certain, likely, possible, unlikely, or rare. Below is an example of what your completed risk management matrix should look like. To use it effectively, simply look at your circumstances and apply the same logic. It’s that easy.