Which elements typically compose a risk assessment matrix?

A risk assessment matrix is a valuable tool used in risk management to evaluate and prioritize risks based on their likelihood of occurrence and their potential impact on an organization. This approach allows auditors and risk managers to categorize risks more effectively and make informed decisions about which risks to address first.

The combination of likelihood and impact is essential because it provides a clear picture of the risk landscape. Likelihood refers to the probability that a risk event will occur, while impact represents the potential consequences or severity of that event if it does occur. By assessing both elements, organizations can identify risks that pose the greatest threat to their objectives and allocate resources accordingly.

In contrast, while cost and benefit or frequency and severity might relate to risk analysis, they do not specifically define the primary elements used in a risk assessment matrix. Similarly, source and mitigation do not capture the essential characteristics needed for evaluating risks; instead, they pertain to identifying the origins of risks and the strategies to address them after the assessment has taken place.