In our school days, we studied about probability of occurrence of an event like probability of getting 2 when rolling a dice once = 1/6. I hated probability in my college days as lot of derivations and assumptions need to be done. When I studied the same in Project Risk Management, I understood the real application. But it is not too late for me to brush up my school probability one more time.
Okay, let us dive into the topic right now.
What are ‘known’ risks?
‘Known’ risks are somewhat predictable & proactively managed. ‘Known’ indicates those risk that can be identified, analyzed & planned in advance.
What are ‘unknown’ risks?
Unknown risks are those unable to anticipate and describe. Unknown risks cannot be managed proactively. These risks that result from the uniqueness of the work and they are difficult or impossible to anticipate.
For any project, before starting risk management planning process, ‘Unknown’ risks would be high. But through proper Risk Management Planning process, almost all risks can be explored which keeps ‘unknown’ risks to a minimal number.
In ideal situation, 0% ‘Unknown’ risk possible!(?)
Generally, the best method for managing unknown risk involves allocating reserves on the basis of the measured consequences of unanticipated problems on similar past projects.