An outcome picture collection can look like a standard consequence matrix.
You may have been given a ‘standard’ or ‘example’ for a consequence scale or matrix. If you have one, you may have noticed a resemblance between that one and the collection of outcome pictures you built from your unit’s objectives. The resemblance will be very clear if your outcomes are in a matrix format showing the pre-defined success and failure levels, like this example for payroll outcomes (PDF, A3 landscape).
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Sometimes the scale is called an ‘impact’ scale (matrix) rather than a consequence scale (matrix). The intended use is the same, despite the obvious fact that (literal) impacts are momentary, while consequences last. ‘Impact’ is yet another business metaphor that has lost its original meaning. The common type of consequence matrix has types of consequence (impact) on one axis, and levels of consequence (impact) one the other. The levels are the consequence ‘scale’. There are usually between four and seven types of consequence. Most often, there are five levels of consequence, all negative. The least negative consequence level might have a one-word name like ‘insignificant’ or ‘minor’, and the worst will have an emotive name such as ‘catastrophic’. The levels of negative consequence may be numbered, but they are not numerical values. Only a few people admit to making the fundamental mistake of using the number labels in calculations. |
Most often, there are five levels of consequence, all negative. The least negative consequence level might have a one-word name like ‘insignificant’ or ‘minor’, and the worst will have an emotive name such as ‘catastrophic’. The levels of negative consequence may be numbered, but they are not numerical values. Only a few people admit to making the fundamental mistake of using the number labels in calculations.
Examples of consequences at each level and of each type appear in the matrix cells.
In conventional use, a consequence matrix links one of the consequence levels with a single risk scenario:
- The risk consequence is matched to one of the example cells.
- The consequence level is noted with each risk. Perhaps the consequence type is also noted with the risk.
- The example is not noted.
There are similarities and differences, between the collection of outcome pictures and the common type of consequence matrix.
The similarity arises because a picture collection and a consequence matrix have a similar structure. Both serve to represent the consequence dimension of risk. You can make the picture collection look very much like a conventional consequence matrix. By doing that you may help calm down any alarm among the risk process police.
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Steps for reconciling your outcome picture collection with a corporate consequence scale |
For you, the differences will be far-reaching.
There are fundamental differences between an outcome picture collection and a standard consequence matrix.
These are the important differences. This table is perhaps unnecessarily comprehensive for unit managers trying to get on with the real world. It will excite risk specialists more than it excites you. It’s here because you might find in it a key that unlocks a mystery that has been bothering you.
| Aspect | Outcome collection | Consequence matrix |
| Types of effect | Effects are understood as outcomes on defined objectives. The objectives are specific to the work unit or organisation. The objectives are developed from big questions. Those big questions resemble the dimensions of the Balanced Scorecard. |
The types of consequence are common to all work units within an organisation, and similar across organisations. The organisation’s specific objectives are not considered, or are linked only in a generalised way. The types of consequence resemble the dimensions of the Balanced Scorecard or PESTLE. |
| Timing of effect | Effects on objectives are defined as the outcomes reached at a specified future date. Events are evaluated in respect of the way they change the outcome at the future date, not on the immediate or short-term effects. ‘Capability’ objectives reflect the longer-term prospects, looking forward from that specified date. |
Consequences are usually short-term, or have an effect of unspecified duration. An adverse event has a particular rating based on its short-term characteristics, without recognising the potential for recovery, learning, or long-term benefit, from the incident. |
| Range of effect | Includes planned success and even better outcomes, along with worse outcomes in varying degrees. | Only negative effects relative to planned success, in varying degrees. Planned success is not usually described anywhere on the same page. (These details can be changed.) |
| Amounts of effect | Levels of success and failure are used to guide development of specific outcome pictures for each objective. After development, the pictures themselves are the primary definition of ‘consequence’. The levels of success and failure are just convenient short labels and can be discarded entirely. Numbers can be used as reference labels. |
The consequence levels are referenced by numbers or short word labels, such as ‘minor’. |
| Regularity | The number of different success and failure levels can vary between different objectives. The picture collection is not necessarily rectangular. | There is a fixed set of levels for each type of consequence. A conventional matrix is always a neat rectangle. |
| Cell contents | Pictures of outcomes on each objective, ranging across different levels of success and failure. | Examples of consequences of each type and level. (Sometimes formal definitions are given, with more force than ‘examples’.) |
| Equivalence across consequence types | Outcomes on different objectives are never assumed to be equivalent, even if they are at the same nominal success or failure level. | Consequences of different types at the same level are (implicitly) treated as equal in importance and acceptability. |
| Objectivity | Outcome pictures represent alternative realities at the future date. The reality of one picture and not another will be a fact, not a perception or judgement. The process of drawing those pictures means they will be relevant to true organisational objectives. The outcomes that really matter take precedence over the availability of measures and indicators. |
Examples in consequence cells usually include ‘hard’ measures requiring minimal judgement, such as dollar figures for losses. There may be a conscious effort to maximise the ‘hardness’ of measures and indicators. Those measures relate to the organisation’s genuinely important outcomes in an unclear or disputable way. The matrix is developed with minimal regard to unique organisational objectives. |
| What is recorded for each risk | The picture representing the outcome expected to follow if the risk becomes reality. (The picture is predefined, so may be referenced rather than replicated.) The level of success and failure is not separately meaningful, and is not recorded. The objective represented by the picture should be obvious, and need not be recorded separately. |
The consequence level, and optionally the consequence type, expected to follow if the risk becomes reality. (Some very vague risk registers might show only the ‘level of risk’, which rolls up the risk’s likelihood level as well as the consequence level.) |
| Use for aggregated risk | Each outcome can be given an overall likelihood, with or without first assessing the likelihood of each risk that would lead to that outcome. There is no aggregation by consequence ‘level’, because ‘levels’ are not recognised separately from specific outcomes. |
Aggregation at consequence ‘level’ is only by risk count. There is usually also a risk count by likelihood levels, to create a so-called ‘heat map’. Risk count is at best a vague measure of overall risk, and is almost useless for making decisions. |
| Use in making decisions based on risk | Outcome pictures lead to a concept of risk tolerance and then to acceptability. A risk tolerance is the maximum or minimum likelihood for a specific outcome. Acceptable risks are those within tolerance. Risk ‘acceptability’ is used in the path from understanding to decision-making. ‘Level of risk’ is not. The pathway takes into account any offsetting benefits from accepting risk. Offsetting benefits are represented as improved acceptability of a different outcome likelihood. |
Consequence levels are supposed to lead to ‘levels of risk’ when combined with a likelihood measure, typically by a look up table. Level of risk is usually taken to determine whether a risk is acceptable or not, based on appetites or tolerances understood as zig-zag lines drawn across the lookup table. The specific type of effect on objectives is not part of the pathway from understanding to decisions. (There is some variation in this area.) |
Authoritative standards do not mention either outcome pictures or consequence matrices. Both are interpretations of the ‘consequence criteria’ defined in the International Standard ISO 31000. The Standard allows room for any number of interpretations.
Debate aspects of the Clear Lines interpretation of ‘effect on objectives’ as an outcome difference at a defined future date
Drill-down articles
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Reconciling your outcome picture collection with a corporate consequence scale |
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Parent articles
Main article on Risk in work unit business planning
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