Unknown Unknowns
An unknown unknown is the state of being unaware that a particular type of knowledge exists. For example, an investor who is unaware of the concept of liquidity may purchase the stock of a firm with a high debt load, negative cash flow from operations, rising cost of capital and other issues that make bankruptcy possible. Such an investor is exposed to a firm's liquidity risk without knowing that such a concept exists.Black Swans
Black swans are a class of high impact, low probability events that are difficult to predict. In some cases, low probability risks are excluded from risk management because they seem so improbable. However, events that are high impact may be a significant risk even if their probability is extremely low.Outside Context Problem
An outside context problem is a large scale problem that is beyond the imagination of a society until it suddenly happens. For example, a primitive and isolated tribe that suddenly encounters a more advanced society.Risk Identification Shortfall
Risks may simply be missed by the process of risk identification. For this reason it is common to involve all stakeholders in risk identification and to bring in subject matter experts as required. For example, an information security expert may be required to identify risks to an information technology project.Summary
An unknown risk is a risk that is unknown to those it impacts. This can be because the risk hasn't been identified or disclosed. In some cases, a risk is beyond the experience and knowledge of a society, organization or individual such that it is difficult or impossible to identify.
| Overview: Unknown Risk | ||
Type | ||
Definition (1) | A potential for loss that is completely unknown to you. | |
Definition (2) | A non-zero probability risk that isn't identified by risk management. | |
Related Concepts | ||
