An important part of innovation, risk management, change management, continuous improvement is overcoming the fear of the unknown. We humans are wired with an intense aversion to both risk and uncertainty. Research shows that both have separate neural reactions and that choices with ambiguous outcomes trigger a stronger fear response than do risky choices. Additional research shows that the risk itself isn’t so much the problem, but the uncertainty is: we are afraid primarily because we don’t know the outcome and less so because of the risk.
There are three types of uncertainty:
- Aleatoric Uncertainty: The uncertainty of quantifiable probabilities.
- Epistemic Uncertainty: The uncertainty of knowledge.
- Knightian Uncertainty: The uncertainty of nonquantifiable risk.
I wrote more on this in my post “Uncertainty and Subjectivity in Risk Management.” This post mostly stems from wanting an excuse to share a funny comic.
10 thoughts on “Types of Uncertainty”