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Problems with Risk Matrices Using Ordinal Scales

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  • Michael Krisper

Abstract

In this paper, we discuss various problems in the usage and definition of risk matrices. We give an overview of the general process of risk assessment with risk matrices and ordinal scales. Furthermore, we explain the fallacies in each phase of this process and give hints on which decisions may lead to more problems than others and how to avoid them. Among those 24 discussed problems are ordinal scales, semi-quantitative arithmetics, range compression, risk inversion, ambiguity, and neglection of uncertainty. Finally, we make a case for avoiding risk matrices altogether and instead propose using fully quantitative risk assessment methods.

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  • Michael Krisper, 2021. "Problems with Risk Matrices Using Ordinal Scales," Papers 2103.05440, arXiv.org.
    • Handle: RePEc:arx:papers:2103.05440
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    File URL: http://arxiv.org/pdf/2103.05440
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    References listed on IDEAS

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    1. Louis Anthony (Tony) Cox, 2012. "Confronting Deep Uncertainties in Risk Analysis," Risk Analysis, John Wiley & Sons, vol. 32(10), pages 1607-1629, October.
    2. Louis Anthony Cox, 2009. "Risk Analysis of Complex and Uncertain Systems," International Series in Operations Research and Management Science, Springer, number 978-0-387-89014-2, April.
    3. Louis Anthony (Tony) Cox & Djangir Babayev & William Huber, 2005. "Some Limitations of Qualitative Risk Rating Systems," Risk Analysis, John Wiley & Sons, vol. 25(3), pages 651-662, June.
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    Cited by:

    1. F. Acebes & J. M. González-Varona & A. López-Paredes & J. Pajares, 2024. "Beyond probability-impact matrices in project risk management: A quantitative methodology for risk prioritisation," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-13, December.

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