How to manage what we don´t know!

Risk management is a core strategic discipline! There are two categories of risks in business decisions: knowable (and therefore learnable) and unknowable.

Learnable risks are the ones we could make less uncertain if we had the time and resources to learn more about them.

The crucial distinction between learnable and random risks is not about how to manage them. In fact, there is always something to learn about managing every risk. We can improve response times, train people to recognize signs that something has gone wrong and even control the size of our exposure. Whether a particular risk is learnable or random thus has little to do with our ability to manage it.

Random risks would be the ones where nothing we could learn would reduce the uncertainty behind them.

Scoring your risk intelligence:

Rule 1. Recognize which risks are learnable.

Rule 2. Identify risks you can learn about fastest.

Biblio: Apgar, David, Risk Intelligence, Harvard Business School Press, 2006