What do you think of heat maps?

Heat maps are one of the most popular ways of comparing individual sources of risk.

A heat map is suggested as a way of reporting in the COSO ERM Framework.

But I dislike them, as do many practitioners. My reasons include:

• There is a range of possible effects from a possible event or situation, not a single point, and each point in the range has its own likelihood.
• It doesn’t help you to determine whether to take a risk, because it is without any context of potential reward.
• Decisions should be based on the big picture. An objective may be affected by multiple sources or risk and opportunity (things that can happen with positive and/or negative effects). Making decisions one source of risk at a time is clearly sub-optimal.
• It focuses on risks while I want to focus on achieving objectives, what I call success management.
• There are better methods, which I have described in this blog and in my books.

Grant Purdy shared an article with me (he dared me to write about it) that takes a more satirical view.

An exciting new lexicon for the professional risk manager has a different way of describing heat maps.

What do you think?