Risk vs. Uncertainty

Quick answer

Risk usually refers to uncertain outcomes whose likelihood or impact can be estimated; uncertainty describes situations where outcomes or probabilities may be unknown.

Real-world example

A game with a known one-in-six chance of rolling a six involves measurable risk. Launching a completely new product involves greater uncertainty about demand.

Questions to ask yourself

• What is my goal and what assumptions am I making?
• What could go wrong, and how severe might the consequences be?
• Which options could reduce my exposure without creating bigger problems?

Put the idea into practice

Reading is only the beginning. Explore an interactive tool to see how your decisions can affect a simulated outcome.