The concept is illustrated in the chart. Each risk is assessed and placed in one of the cells in the matrix. In this case it is a 3x3 matrix, but larger ones are more usual. The position in the matrix then provides a prioritisation.
If the risk is towards the top right it is both likely and has large consequences it is a 'red' risk which needs to be urgently addressed.
If the risk is towards the bottom right - not very likely, and a small impact even if it does happen - it is a green risk and does not require urgent attention.
Databases of risks prioritised this way can be drawn up. The risks and treatment actions can be assigned to owners and the software can be used to generate to-do lists and management reports and to draw charts of the ridsk matrices, possibly both before and after treatment. These databases are called risk registers and provide valuable support to risk management.