HuffPost: Don't Confuse Uncertainty with Risk

The first dimension is the “level of evidence required” in order to make the move. The second dimension is the “level of confidence” that we have in making the move in the first place.
The first dimension is the “level of evidence required” in order to make the move. The second dimension is the “level of confidence” that we have in making the move in the first place. Huffington Post

The economist Frank Knight first popularized the differentiation between risk and uncertainty almost a century ago. Though it is a dramatic oversimplification, one critical difference is that risk is – by definition – measurable while uncertainty is not . We are living in a digital era increasingly dominated by uncertainty, driven in part by the rise of exponential change. The problem is, we are generally clogging up the gears of progress and growth in our companies by treating that uncertainty as risk and by trying to address it with traditional risk mitigation strategies.

Virtually everything we do to migrate through risk is going to be within or adjacent to our core business of today. But the level of analysis we do – and how much time we take to try to understand the risk and make a decision – should vary.

The only way to consider a highly uncertain action is to “just do it.” If we can train ourselves and our organizations to talk more about ways to navigate risk, and less about how risky something feels – then we might actually be able to start thriving in a world that is increasingly uncertain.

In this month’s column, I provide two dimensions for dealing with the uncertainty of risk and what organizations should consider before making a strategic move.

Read the full article.
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