Developing a Risk Management Matrix for Effective Project Planning—An Empirical Study

Abstract

This paper presents a risk management matrix for effective planning of industrial projects. A schematic view of the project environment has been suggested to systematically identify the effects of various project environments, and thereby take a holistic view of risks arising out of immediate and external environments. Various subfactors within each risk element are presented. A process to quantify the immediate and external risks for industrial projects using a weighted probability method is proposed. To derive a useful interpretation, a risk management matrix is also proposed. The results of empirical validation of the model in two recently concluded large industrial projects are also presented. The risk management matrix model can be used to identify a number of policy alternatives at the planning stage.