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Uncertainty and Risk

The practical difference between the two categories, risk and uncertainty, is that in the former the distribution of the outcome in a group of instances is known (either through calculation a priori or from statistics of past experience), while in the case of uncertainty this is not true, the reason being in general that it is impossible to form a group of instances, because the situation dealt with is in a high degree unique.

Risk, Uncertainty and Profit
Frank Knight 1921

Risk of falling off your bike = known potential outcomes.

Uncertainty of the future of European Union government = unknown potential outcomes.

Risks are therefore the known unknowns.

Uncertainties are the unknown unknowns.

Startups operate in a world of uncertainty and they need to identify risks to their business model, address these risks and reduce uncertainty.

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