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When you write a risk/create a risk, you also create what the probability and impact are of the risk so you can rank it. Basically, the probability is the possibility of the risk occurring and impact is the effect of it not being mitigated.
Probability is nothing but the possibility that a risk would be realized,
Impact is the effect of the risk - may be positive or negative
You can use numbers 1 to 10 scale for probability and impact OR measure against High, Low, Medium. Based on the evaluation, place them in the matrix. Read following for more information:
I am also, looking at how others are creating their probability and impact matrix. Is there a single format or are different PM's creating their tools differently?
A PI matrix will provide a view into the distribution of the identified risks across both qualitative dimensions. It is important to check whether there are standard definitions for ratings such as High Probability or Medium Impact in your organization to ensure consistency project-to-project. You will also want to look for methods of overcoming individual biases when having stakeholders do qualitative risk analysis - Delphi method is one option.
You might want to download and read through the Practice Standard for Risk Management from PMI's website to get more insights.
To add something to Kiron comment above, remember that the probability and impact values are up to you (better said, up to your organization and initiative)
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