"Decision Matrix Analysis" for risk assessment & decision making as a group

R.M. Boylan
Feb 25
5 min read

Updated: Feb 26

R.M. Boylan BSc. M.A.

AI art regeneration: Prompt image vintage of risk assessment as a metaphor.

Decision Matrix Analysis

I have used variations of this tool throughout my career to get groups to share accountability and make a decision together on a high risk decision. This is a logical approach devoid of emotions. The entire team of decision-makers usually feels confident and certain after doing such an assessment as a group.

One of the best tools for group decision-making that evaluates various aspects of a scenario is the Decision Matrix Analysis (DMA). This tool allows groups to systematically evaluate multiple scenarios based on:

Scenario Evaluation: Each scenario is assessed based on predetermined criteria.
Probability of Occurrence: The likelihood of each scenario occurring is estimated.
Impact Intensity: The potential impact of each scenario is rated, often on a scale.
Timing: The timing of potential impacts is considered to understand urgency.
Confidence Level: The group's confidence in their assessments is recorded.
Financial Gain and Losses: Each scenario is analyzed for potential financial outcomes, including gains and losses.

This structured approach facilitates comprehensive discussions among group members, leading to more informed and balanced decisions.

Decision Matrix Analysis

Decision Matrix Analysis is a systematic approach used to evaluate and prioritize different options based on specific criteria. This method allows decision-makers to assess the potential outcomes of various scenarios, taking into account factors such as probability of occurrence, impact intensity, timing, confidence level, financial gains, and financial losses.

Components of Decision Matrix Analysis

Scenarios: Different possible situations or options to evaluate.
Probability of Occurrence: Likelihood that a particular scenario will happen, usually expressed as a percentage.
Impact Intensity: The degree of effect a scenario would have if it occurred, often rated on a scale (e.g., 1-5).
Timing: The timeframe in which the scenario may occur.
Confidence Level: The certainty of the probability estimate, often expressed as a percentage.
Financial Gain: The potential positive monetary outcome associated with a scenario.
Financial Losses: The potential negative monetary outcome associated with a scenario.

Example Decision Matrix

Scenario	Probability of Occurrence (%)	Impact Intensity (1-5)	Timing (Years)	Confidence Level (%)	Financial Gain ($)	Financial Loss ($)
Scenario A	70	4	2	80	100,000	30,000
Scenario B	50	3	1	70	50,000	10,000
Scenario C	30	5	5	60	200,000	50,000

Importance of Risk Assessment in Decision-Making

Risk assessment is a critical component of decision-making, especially in government-related decisions that affect civilians. Here are several reasons why:

Informed Decision-Making: Risk assessments provide data-driven insights, allowing decision-makers to understand potential risks and benefits associated with various options.
Resource Allocation: By identifying high-risk scenarios, governments can allocate resources more effectively to mitigate risks and enhance public safety.
Public Trust: Transparent risk assessments can build trust between government entities and the public, as citizens see that their safety and well-being are prioritized.
Regulatory Compliance: Many regulations require risk assessments to ensure that decisions comply with safety standards and legal obligations.
Long-Term Planning: Understanding risks helps in creating sustainable policies that consider future implications and avoid short-term solutions that may lead to long-term issues.

Large Scale Group Decision-Making

Options for Group Decision-Making

These techniques naturally are more scientifically sophisticated. The Decision Matrix Analysis is for group decision-making on a risk or a business or political decision that should not be made alone. These techniques we have used to validate the science in our files with input from external stakeholders for example.

Delphi Technique - A method that utilizes rounds of anonymous surveys to gather expert opinions. [Delphi Method Overview](https://www.rand.org/pubs/monograph_reports/MR1629.html)
Nominal Group Technique - A structured method for group brainstorming that encourages contributions from all members. [Nominal Group Technique](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1993930/)
Consensus Decision-Making - A process that seeks the agreement of most participants while resolving objections. [Consensus Decision-Making](https://www.semanticscholar.org/paper/Consensus-Decision-Making%3A-A-Guide-to-Effective-Group-McCoy/8c2c2c3d8e4c0a7f3c6e4f3d5b2c0b7b7f1e0b5e)

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https://www.rand.org/pubs/monograph_reports/MR1629.html)
(https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1993930/)
(https://www.semanticscholar.org/paper/Consensus-Decision-Making%3A-A-Guide-to-Effective-Group-McCoy/8c2c2c3d8e4c0a7f3c6e4f3d5b2c0b7b7f1e0b5e)