Risks – The Known Unknowns

Risks – the known Unknowns

The Known, the Known Unknowns and the Unknown Unknowns. What does this wordplay have to do with risk management and why is it important to understand it? In this article you will learn an elementary basis of risk management, which will make risk management in your project even more successful.

What Are the Known Unknowns?

Donald Rumsfeld has made this wordplay so well known. Was he deliberately trying to confuse the audience with this unusual quote?

There are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns – the ones we don’t know we don’t know.” (Former United States Secretary of Defense, Donald Rumsfeld)

Rumsfeld made this statement at a press conference on 12 February 2002 when he announced that there was no evidence that Iraq was supplying weapons of mass destruction to terrorist groups. The use of this confusing statement has been criticized by many.

In risk management you have to deal with the “known unknowns” and the “unknown unknowns”. In this article, I will show you exactly what this play on words means and what connection it has with risk management.

The Known – The Facts

This word play may be a bit confusing for you at first, but it is important to understand it in order to practice effective risk management. The “known” are knowledge that the project already has. These are not uncertainties. They are clear facts that have to be incorporated directly into the project planning and be dealt with operationally. In connection with risk management, these knowns are often confused with risks, even though they are actually current, already known problems. This is where problem management comes in. The following figure shows you the connection between the degree of knowledge about risks, the corresponding procedure and the project management method used.

The Known Unknowns – The Risks

The “known unknowns” are risks that have been identified in the risk analysis, e.g: “The solvency of our contractor is mediocre. He may become insolvent because of the current recession”.

For these known uncertainties, which can have negative or positive effects on the project, you should take actions if reasonable. This is to mitigate potential damage or to take advantage of potential opportunities.  However, there are also risks that you do not yet know at present and that you will only become aware of later in the project.  These are the unknown risks.

The Unknown Unknowns

The “unknown unknowns” are risks that have not been identified in the risk analysis but are present. This potential threat exists, but you know nothing about it. At some point during the project you may be confronted with the impact of such a risk without warning. Then the crisis management capabilities of the project manager are probably required.

Crisis Management – Risk Management – Problem Management

from Risk-Management to Crisis Management
from Risk-Management to Crisis Management

The following summary shows you again the differences discussed above:

  • The Knowns → Facts, known problems
  • The Known Unknowns → Identified risks
  • The Unknown Unknown → existing but unidentified risks

With a little more effort and engagement in risk identification, you can often identify many “unknown unknowns”. Your goal is certainly to avoid all possible problems in the future? What you have learned in this article will help you to make your risk management even more effective.

Project-Risk-Management-Book-Cover

What experience do you have with with the Knowns and the Unknowns? Do you agree with my statements or do you have a different opinion? Share your experience with the readers with a comment, so that we can all get to know a different point of view. Thank you!

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Posted in Risk Management.

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