Interpreting the risk matrix
The colour of each tile represents a different level of risk to your company. Below is an example of a risk matrix with the colours labelled and their corresponding meaning:
Critical: Almost certain to have a severe negative impact on the organisation, potentially leading to critical operational, legal, or financial challenges
Significant: Likely to have a substantial adverse effect on the organisation's ESG performance and may demand immediate corrective actions.
Important: Could affect the organisation's ESG performance or reputation, requiring active management and monitoring.
Informative: Could potentially have a minor impact on the organisation's ESG performance or reputation, no need for active management and monitoring for now.
Minimal: Unlikely to impact the organisation's ESG performance in a significant way.
There are two ways your Financial Materiality Assessment results are calculated.
If at least one Risk has a rating of Critical or Significant, the system will automatically recommend that the ESG issue is Material.
If at least one Opportunity has a rating of High or Medium, the system will automatically recommend that the ESG issue is Material.
Each level of Criticality in the Risk corresponds to a numeric Risk rating. This rating then triggers a Materiality recommendation.
| Preliminary Financial Materiality | Material result |
Critical | 4 | Trigger materiality recommendation |
Significant | 3 | Trigger materiality recommendation |
Important | 2 | Trigger materiality recommendation |
Informative | 1 |
|
Minimal | 0 |
|
For Opportunities, High and Medium levels of Potential upside will trigger a Materiality recommendation.
Degree of Potential Upside | Material result |
High | Trigger materiality recommendation |
Medium | Trigger materiality recommendation |
Low |
|
Very Low |
|