The De-Risk Matrix
Your choice of goals is your choice of risk
The De-Risk Matrix is your tool for strategic goal- and risk management. It guides you in choosing goals, determining their risk states, and developing an effective risk strategy and culture to achieve them!
FREE TO USE!
The De-Risk Matrix in short
Your choice of goals determines your level of risk, with your goals serving as the reference point. The De-Risk Matrix is designed to help you improve performance when selecting goals and adjusting their risk state on the path to achievement. It explores the connections between goals, risks, and culture, and how these elements interact. Goal, risk, and culture management are key components of the De-Risk Matrix, designed to work together:
Goals are refined by defining boundaries for uncertainty. This involves creating a goal range with an upper limit, the target value, and a lower limit, the threshold value, which should not be crossed.
Risks are refined by strategically focusing on the risk state of goals rather than only individual risks. A goal's risk state considers all associated risks, including opportunities and threats. Risk states are uncovered by forecasting and evidencing.
Culture is refined by presenting recommended cultural practices for each risk state to increase the chances of effective risk management. This gives valuable insight for an effective risk strategy. Culture is emphasized because it's often the biggest barrier to achieving goals.
The De-Risk Matrix acts as a "canary in the coal mine" for businesses and projects. By January, you can predict goal achievements and risk levels for the next six months. This early analysis allows you to take proactive measures to ensure success and manage risks effectively.
Do we need to adjust goals, reorganize, or train to meet objectives? What’s the best risk strategy? Are there cultural factors to address? This foresight and early action provide the opportunity to influence outcomes from the start.
Achieving harmony between ambition and capacity
The De-Risk Matrix is designed to help you understand the risk state patterns of your goals and determine the best risk strategy to manage goal setting and achievement. It integrates goals, risks, and culture to ensure that the goals you set align with your capacity to achieve them. By identifying the risk state of your goals, you can evaluate whether your current approach is balanced and find a framework for prioritizing and selecting the most effective actions if adjustments are needed. This approach allows you to set and achieve goals within your means. The guiding principle is to address goals and their associated risks together, including cultural management, creating a harmonious risk state that supports successful goal achievement.
The process
The practical application of the De-Risk Matrix encompasses four key process steps. Each step demands a thorough understanding of the interplay between goals, risks and actions. It's essential to repeat the process regularly and whenever significant changes occur to ensure ongoing risk management and goal alignment.
The De-Risk Matrix: A Valuable Addition to Your Strategy Toolkit
The De-Risk Matrix can coexist with and enhance other well-known strategic tools, such as:
Objectives and Key Results (OKR), Balanced Scorecard, and SMART goals for setting, clarifying, and delegating objectives within the organization.
Blue Ocean for identifying and capitalizing on new opportunities.
VRIO, SWOT, PESTEL, McKinsey's 7S, Porter's Five Forces, and others for identifying and analyzing risks, both positive and negative, that could impact goal achievement.
What differentiates the De-Risk Matrix from these other tools is its focus on risk management as a foundational approach. While the above-mentioned tools can help identify and assess risks, the De-Risk Matrix is designed to integrate these findings into a comprehensive risk management framework. For example, a SWOT analysis can reveal strengths, weaknesses, opportunities, and threats in a given context. These can be implemented in forecast tools and help finding specific goal’s forecast.
The De-Risk Matrix can serve as a unifying platform to consolidate the insights from these various exercises. By synthesizing these findings, you can better understand the risk state of your goals, and the De-Risk Matrix can guide you in developing effective strategies to manage these risks.
“The De-Risk Matrix is the result of years of work on strategic goal-setting and risk processes in both large and small organizations, as well as public and private sector projects. We observed that risk management hasn't fully integrated with goal-setting, and goals haven't been adequately considered in risk management. The De-Risk Matrix offers a new approach to risk, showing that it's not just about finding threats, but also about identifying opportunities. The total risk includes both. Traditionally, risk is seen as "how big the hole in the floor is" (probability x (negative) consequence). Modern definitions, like ISO 31000, encourage us to look upward into the realm of possibilities. This shift in risk thinking also considers "how high the building is and could grow." This represents a significant change in how we approach risk and goal-setting.”
Magnus Bjelkerud, the creator of the de-risk matrix methodology
Prerequisites for Using the De-Risk Matrix
There are five key prerequisites for effectively using the De-Risk Matrix. Failing to meet these prerequisites could significantly reduce the value of the method.
The first prerequisite is that each goal must have a defined range: a target value that represents success—the goal's target value—and a minimum acceptable threshold—the goal's threshold value. Success is achieved by staying within this range within a specified timeframe.
The second prerequisite is that risk is defined according to the international standard ISO 31000: "the effect of uncertainty on objectives." This means that if an uncertainty has no impact on a goal, it's not a risk—just irrelevant uncertainty.
The third prerequisite is an acknowledgment of an analytical approach, recognizing that a risk state is a combination of a goal's forecast and the associated level of evidence. The more risks accounted for in the forecast, the stronger the evidence supporting the risk assessment.
The fourth prerequisite is that the organization recognizes that culture is the primary barrier to goal achievement, and it's largely shaped by leadership over time. Furthermore, the risk state of a goal determines the organization's approach to leadership behavior, culture, and values.
The fifth prerequisite is that risk states have different levels of urgency regarding how quickly they need to be addressed. This guides prioritization and ultimately shapes risk strategy. There's no single right answer, but the De-Risk Matrix provides a structured reference for determining priorities. This is illustrated through well-known color gradients from recognized risk assessment methods.