A-Z Popular Blog Projects Search »
Project Management
Related Guides
Project Management

What is a Probability-Impact Matrix?

 , updated on January 13, 2023
A probability-impact is a basic risk measurement that can be used to estimate the costs of risks. It is expressed as follows:

Risk = Probability * Impact

The resulting risk estimate represents a probable loss.


An ice cream cone costs $5 and a toddler has a 10% chance of dropping it without help.
Risk = (10/100) * $5 = $0.50

Probability Impact Matrix

When risk measures are based on rough estimates, as is often the case with project risk estimates, it is common to represent probability-impact as a matrix of discrete combinations. For example:
Probability-Impact Matrix: Toddler With Ice Cream
Probable Loss
Small Ice Cream Mess
Cost of clean up = $0.10
Big Ice Cream Mess
Cost of clean up = $0.50
Total Loss of Ice Cream
Cost of replacement = $5

Probability Distributions

The relationship between probability and impact is better modeled with a probability distribution that provides all possible combinations of probability and impact. Sophisticated risk measurements, such as those used in to model investment risk, are typically based on probability distributions and other statistical techniques.
Risk measures that rely on a single sample of probability-impact or several samples in a probability-impact matrix are less accurate than those that are properly modeled with a probability distribution.
In the example above, there may be thousands of possibilities between a small mess and total loss of an ice cream cone that can be modeled with a smooth curve. Such a curve might have a long tail with remote probabilities such as an ice cream cone causing damage to your car upholstery. As such, the few samples represented in the probability-impact matrix are a rough estimate that wouldn't be used by a bank or insurance company to measure risk.
Overview: Probability Impact
Probability-Impact Matrix Definition
A series of discrete risk estimates calculated as probability × impact represented in a matrix.
Related Concepts

Project Management

This is the complete list of articles we have written about project management.
Acceptance Criteria
Acceptance Testing
Actual Cost
Basis Of Estimate
Behavioral Requirements
Burndown Chart
Change Control
Change Control Board
Change Fatigue
Change Request
Concept Note
Cone Of Uncertainty
Corrective Action
Cost Baseline
Cost Contingency
Cost Control
Cost Overrun
Cost Variance
Defect Density
Definition Of Done
Document Control
Earned Value
Estimate At Completion
Estimate To Complete
Feasibility Analysis
Fudge Factor
Full-Time Equivalent
Human Factors
Issue Management
Lead Time
Lessons Learned
Level Of Effort
Opportunity Study
Out Of Scope
Parametric Estimate
Phased Implementation
Planned Value
Program Management
Project Charter
Project Communication
Project Complexity
Project Concept
Project Controls
Project Failure
Project Goals
Project Management
Project Metrics
Project Planning
Project Productivity
Project Proposal
Project Risk
Regression Testing
Requirements Quality
Return On Investment
Risk Register
Schedule Baseline
Schedule Chicken
Scope Baseline
Scope Creep
Set Up To Fail
Smoke Testing
Stakeholder Management
Statement Of Work
Story Points
Use Case
User Stories
Variance Analysis
If you enjoyed this page, please consider bookmarking Simplicable.

Project Risk

A list of common project risks.

Project Management Basics

A list of basic project management techniques.


A definition of workaround with examples.

Project Branding

A list of project branding techniques.

Stakeholder Management

An overview of project stakeholder management with examples.

Action Plan

A definition of action plan with examples.

Cost Overrun

The primary types of cost overrun.

Document Control

The definition of document control with examples.

Project Oversight

A guide to project oversight.

Design-Driven Development

A definition of design driven development with examples.

Project Risk

A list of common project risks.

Project Stakeholder

A list of common project stakeholders.

Business Risks

A list of common business risks.

Risk vs Issue

The difference between a risk and an issue.

Risk Treatment

The four things that can be done about risk.

Secondary Risk

The definition of secondary risk with examples.

Risk Register

A guide to creating a risk register with an example.

Risk Perception

A definition of risk perception with examples.


The common types of implementation.

Project Risk Management

A reasonably complete guide to project risk management.
The most popular articles on Simplicable in the past day.

New Articles

Recent posts or updates on Simplicable.
Site Map