Unidentified Risks
(→Abstract) |
(→Risk classification) |
||
| (44 intermediate revisions by one user not shown) | |||
| Line 1: | Line 1: | ||
| − | |||
| − | |||
==Abstract== | ==Abstract== | ||
| − | In any project there will be some risks that should be carefully managed, but there will also be uncertainty, which involves variability and ambiguity ( | + | In any project there will be some risks that should be carefully managed, but there will also be uncertainty, which involves variability and ambiguity <ref>https://ocw.mit.edu/courses/civil-and-environmental-engineering/1-040-project-management-spring-2009/lecture-notes/MIT1_040s09_lec24.pdf free to share and adapt under Creative Commons terms: Attribution, noncommercial, share alike (https://ocw.mit.edu/terms/) (https://creativecommons.org/licenses/by-nc-sa/4.0/legalcode). Slides by Fred Moavenzadeh from MIT </ref>. This article outlines four different types of uncertainty with the main focus on the unidentified risks (or the “unknown unknowns”). Unidentified risks are the risks that seem impossible to find. However, studies have found that they in fact are not unidentifiable. |
| + | |||
| + | To describe uncertainty management in detail, this article will first explain what variability and ambiguity in projects consists of and then dig deeper into the different types of uncertainty. Finally, some tools to manage the unidentified risks are presented as well as a reflection on the usage of the tools. | ||
| + | |||
| + | The unknown unknowns are the type of uncertainty that is generated due to lack of knowledge or unexpected events and changes in the project <ref>Slides from Project Management course (42429 F18)</ref>. Before a project is started, it is important to reflect on the possible factors that can influence the project. Part of this is to reflect on the types of uncertainty, namely the known knowns (change control), known unknowns (risk management), unknown knowns (planning & communication errors) and the unknown unknowns (unexpected events and changes). A model to describe these four types of uncertainty is the Cynefin Framework which is divided in to the following: Order, unorder and disorder. Unorder is furthermore divided in to the complex domain and the complicated domain, while order is divided in to the chaotic domain and the simple domain. The Cynefin Framework will be used as a model to describe the types of uncertainty throughout this article. | ||
| + | |||
| + | ==Uncertainty== | ||
| + | To understand the theory of uncertainty management and thereby the importance of managing the unidentified risks, this section will first describe what uncertainty really is as well as link it to risk management. Furthermore, the different types of uncertainty will be outlined. | ||
| + | |||
| + | The British Standard (Axelos) <ref>https://ebookcentral-proquest-com.proxy.findit.dtu.dk/lib/dtudk/reader.action?docID=4863041&ppg=30 Project Management: "Managing Successful Projects with PRINCE2", Axelos </ref> distinguishes project work from “business as usual” by the following characteristics: | ||
| + | |||
| + | Change, temporary, cross-functional, unique and uncertainty. | ||
| + | |||
| + | *Change implies that a project introduces a change from one state to another. | ||
| + | *Temporary is part of the definition of a project and means that business as usual returns after the project is finished. | ||
| + | *Cross-functional means that a project involves people from different backgrounds working together towards a common goal. | ||
| + | *Unique implies that no projects are identical | ||
| + | *Uncertainty covers the threats (and opportunities) that the other characteristics bring to the project work. These threats and opportunities are often bigger and more important than those in everyday work, meaning that projects are subject to more risk. | ||
| + | |||
| + | This article focuses describes the uncertainty of projects. The term “uncertainty” is defined by Chapman and Ward (2002) <ref> Chapman, Chris & Ward, Stephen. (2002). Managing Project Risk and Uncertainty : A Constructively Simple Approach to Decision Making / C. Chapman, S. Ward. https://www.researchgate.net/publication/31747699_Managing_Project_Risk_and_Uncertainty_A_Constructively_Simple_Approach_to_Decision_Making_C_Chapman_S_Ward </ref> as “lack of certainty, involving variability and ambiguity”, where variability is “uncertainty about the size of parameters which may result from lack of data, lack of detail, lack of definition, lack of experience and so on, which may be quantified if this is useful” and ambiguity is “the aspects of uncertainty not addressed in terms of variability”. Uncertainty can thereby be defined as the aspects of a project that may influence it either positively or negatively which is why uncertainty management is divided into opportunity management (which controls the positive influences) and risk management (which controls the negative influences) (MIT). | ||
| + | |||
| + | ===Classification of uncertainty=== | ||
| + | In 2002 the former U.S. Secretary of Defense Donald Henry Rumsfeld mentioned “unknown unknowns” in a Department of Defense news briefing <ref> https://www.youtube.com/watch?v=GiPe1OiKQuk Donald Rumsfeld DoD briefing </ref>.This made people try to understand the different types of uncertainty by classifying the knowledge. David Cleden (2009)<ref>https://www.amazon.co.uk/Managing-Project-Uncertainty-Advances-Management/dp/B00SLUXH2E Managing Project Uncertainty (Advances in Project Management): Written by David Cleden, 2009 Edition, (1st Edition) Publisher: Gower</ref> uses the typical classification of risks, which is based on the knowledge of an event’s occurrence and impact, to list four possibilities: | ||
| + | *Known–knowns (knowledge) | ||
| + | *Unknown–knowns (untapped knowledge) | ||
| + | *Known–unknowns (risks) | ||
| + | *Unknown–unknowns (unfathomable uncertainty) | ||
| + | The following will describe, and provide examples of, the different elements. | ||
| + | |||
| + | ====Known knowns==== | ||
| + | The known knowns are the knowledge used in the planning phase of a project. This means that even before the project has started, the people involved in the project are aware of basic knowledge or theory behind the project. A very simple example could be that, in a building project, all participants are aware that a lot of money will be spent on materials, salaries and so on. It could also be to identify the obvious stakeholders of the project. | ||
| + | |||
| + | ====Unknown knowns==== | ||
| + | Since a project consists of people from different backgrounds with different skillsets, and there is limited space or resources to hire experts on every single aspect of the project, there will be unknown knowns in a project. These consist of knowledge that is not apparent within the project group but can be gathered from experts on the areas. In the example of a building project, this could be knowledge of an external consultant providing additional details to the planning process of the project. | ||
| + | |||
| + | ====Known unknowns==== | ||
| + | Known unknowns are risks that the project group is aware of the existence of and want to manage carefully. In this sense, the risks are negative impacts on the project that the project has to minimize. These can be risks of material shortage or negative stakeholder involvement in a building project. The risk of negative stakeholder involvement could be due to poor communication to the important stakeholders which leads to them intervening in the project and possibly setting it back to an earlier state. Therefore, the known unknowns are part of risk management. | ||
| + | |||
| + | ====Unknown unknowns==== | ||
| + | The unknown unknowns are the known unknowns that are yet to be identified. As it is located in the cross-section of the uncertain and unidentified, these risks are by far the most difficult to manage. An unknown unknown is an event or impact on a project that is considered unfathomable or even unimaginable which is why they are so difficult to consider in the planning process of a project. It is furthermore difficult to provide an example of an unknown unknown as these are risks that seem unidentifiable, although this article will provide some tools to convert the unknown unknowns into known unknowns which make them easier to manage. | ||
| + | |||
| + | |||
| + | To summarize, the different elements can be shortly described <ref>https://marketbusinessnews.com/financial-glossary/financial-glossary-u/unknown-unknowns/ Market Business News: "What Are Unknown Unknowns? Definition And Examples".</ref>: | ||
| + | *The known knowns are the things we are aware of and understand. | ||
| + | *The unknown knowns are the things understand but aren’t aware of. | ||
| + | *The known unknowns are the things we are aware of but don’t understand. | ||
| + | *The unknown unknowns are the things we are neither aware of nor understand. | ||
| + | |||
| + | ==Models of uncertainty== | ||
| + | This section introduces models to understand and manage uncertainty. | ||
| − | To | + | ===Risk classification=== |
| + | To simplify the classification mentioned in the previous section, the knowledge of an event’s occurrence is labeled “identification” and the knowledge of an event’s impact is labeled “certainty”. In the matrix below, the four different types of (un)certainty are portrayed <ref name=uuarticle> Kim, S. D. (2012). Characterizing unknown unknowns. Paper presented at PMI® Global Congress 2012—North America, Vancouver, British Columbia, Canada. Newtown Square, PA: Project Management Institute. </ref>. The matrix is divided in to certainty and identification. The idea is that “identification” is defined as either “knowledge” or “risk”, i.e. positive or negative and that “certainty” is whether or not we know that a certain event, that can influence the project, exists. This implies that the factors or events that we know exist and have knowledge about are relatively easy to identify and manage whereas the unknown unknowns are much harder to identify and therefore manage. | ||
| − | + | [[File:table_of_uncertainty_1.jpg|center|frame|Risk classification<ref name=uuarticle />]] | |
| − | + | ||
| − | + | ||
| − | + | ||
| − | + | ||
| − | + | ||
| − | + | ||
| − | + | ||
| − | + | ||
| − | + | ||
| − | + | ||
| − | + | ||
| − | + | ||
| − | + | ||
| − | The | + | ===The Cynefin Framework=== |
| + | The Cynefin Framework is a tool developed by David J. Snowden and other contributors<ref>http://pmiswohio.org/images/downloads/Summit18/hatter_cynefin_framework_summit18_03202018.pdf Cynefin Framewok (PMI SW Ohio)</ref> to determine contexts enabling leaders to make appropriate choices. The framework consists of five domains: Simple, complicated, complex, chaotic and disorder. The first two are placed in to the “ordered universe” where facts are applicable. Complex and chaotic are placed in the “un-ordered universe” where the relationship between cause and effect is not immediately apparent. Below, the different domains are shortly explained and linked to the above model <ref name=hbr> https://hbr.org/2007/11/a-leaders-framework-for-decision-making (Cynefin Framework). A Leader’s Framework for Decision Making, Snowden, D. J. et al. 2007 in Harvard Business Review </ref>: | ||
| + | *The simple domain are the known knowns where it is possible to categorize the situation based on facts on the area. | ||
| + | *The complicated domain are the known unknowns where the situation isn’t immediately apparent, but it is possible to analyze the situation. | ||
| + | *The complex domain are the unknown unknowns where the outcome cannot be immediately determined but experiments will lead towards the correct direction. | ||
| + | *The chaotic domain are the unknowable unknowns where nothing makes sense and we search for ways to move more towards the complex domain. | ||
| + | *Disorder is a mix of the above domains and the situation has to be broken down in to parts to assign to the other domains. | ||
| − | = | + | [[File:Cynefin_Framework_(HBR).gif|center|frame|The Cynefin Framework<ref name=hbr />]] |
| − | + | ||
| + | Much like the model described in the above section, this framework suggests that the easiest situation is the simple domain, where the known knowns are found. Furthermore, the framework provides tools for leaders to manage their way out of the above situations. | ||
| − | == | + | ==Tools== |
| − | + | This section introduces some tools to minimize the known unknown risks or identify the unknown unknown risks. | |
| Line 37: | Line 78: | ||
==Annotated bibliography== | ==Annotated bibliography== | ||
| − | + | <references /> | |
| − | + | ||
Latest revision as of 14:42, 22 February 2019
Contents |
[edit] Abstract
In any project there will be some risks that should be carefully managed, but there will also be uncertainty, which involves variability and ambiguity [1]. This article outlines four different types of uncertainty with the main focus on the unidentified risks (or the “unknown unknowns”). Unidentified risks are the risks that seem impossible to find. However, studies have found that they in fact are not unidentifiable.
To describe uncertainty management in detail, this article will first explain what variability and ambiguity in projects consists of and then dig deeper into the different types of uncertainty. Finally, some tools to manage the unidentified risks are presented as well as a reflection on the usage of the tools.
The unknown unknowns are the type of uncertainty that is generated due to lack of knowledge or unexpected events and changes in the project [2]. Before a project is started, it is important to reflect on the possible factors that can influence the project. Part of this is to reflect on the types of uncertainty, namely the known knowns (change control), known unknowns (risk management), unknown knowns (planning & communication errors) and the unknown unknowns (unexpected events and changes). A model to describe these four types of uncertainty is the Cynefin Framework which is divided in to the following: Order, unorder and disorder. Unorder is furthermore divided in to the complex domain and the complicated domain, while order is divided in to the chaotic domain and the simple domain. The Cynefin Framework will be used as a model to describe the types of uncertainty throughout this article.
[edit] Uncertainty
To understand the theory of uncertainty management and thereby the importance of managing the unidentified risks, this section will first describe what uncertainty really is as well as link it to risk management. Furthermore, the different types of uncertainty will be outlined.
The British Standard (Axelos) [3] distinguishes project work from “business as usual” by the following characteristics:
Change, temporary, cross-functional, unique and uncertainty.
- Change implies that a project introduces a change from one state to another.
- Temporary is part of the definition of a project and means that business as usual returns after the project is finished.
- Cross-functional means that a project involves people from different backgrounds working together towards a common goal.
- Unique implies that no projects are identical
- Uncertainty covers the threats (and opportunities) that the other characteristics bring to the project work. These threats and opportunities are often bigger and more important than those in everyday work, meaning that projects are subject to more risk.
This article focuses describes the uncertainty of projects. The term “uncertainty” is defined by Chapman and Ward (2002) [4] as “lack of certainty, involving variability and ambiguity”, where variability is “uncertainty about the size of parameters which may result from lack of data, lack of detail, lack of definition, lack of experience and so on, which may be quantified if this is useful” and ambiguity is “the aspects of uncertainty not addressed in terms of variability”. Uncertainty can thereby be defined as the aspects of a project that may influence it either positively or negatively which is why uncertainty management is divided into opportunity management (which controls the positive influences) and risk management (which controls the negative influences) (MIT).
[edit] Classification of uncertainty
In 2002 the former U.S. Secretary of Defense Donald Henry Rumsfeld mentioned “unknown unknowns” in a Department of Defense news briefing [5].This made people try to understand the different types of uncertainty by classifying the knowledge. David Cleden (2009)[6] uses the typical classification of risks, which is based on the knowledge of an event’s occurrence and impact, to list four possibilities:
- Known–knowns (knowledge)
- Unknown–knowns (untapped knowledge)
- Known–unknowns (risks)
- Unknown–unknowns (unfathomable uncertainty)
The following will describe, and provide examples of, the different elements.
[edit] Known knowns
The known knowns are the knowledge used in the planning phase of a project. This means that even before the project has started, the people involved in the project are aware of basic knowledge or theory behind the project. A very simple example could be that, in a building project, all participants are aware that a lot of money will be spent on materials, salaries and so on. It could also be to identify the obvious stakeholders of the project.
[edit] Unknown knowns
Since a project consists of people from different backgrounds with different skillsets, and there is limited space or resources to hire experts on every single aspect of the project, there will be unknown knowns in a project. These consist of knowledge that is not apparent within the project group but can be gathered from experts on the areas. In the example of a building project, this could be knowledge of an external consultant providing additional details to the planning process of the project.
[edit] Known unknowns
Known unknowns are risks that the project group is aware of the existence of and want to manage carefully. In this sense, the risks are negative impacts on the project that the project has to minimize. These can be risks of material shortage or negative stakeholder involvement in a building project. The risk of negative stakeholder involvement could be due to poor communication to the important stakeholders which leads to them intervening in the project and possibly setting it back to an earlier state. Therefore, the known unknowns are part of risk management.
[edit] Unknown unknowns
The unknown unknowns are the known unknowns that are yet to be identified. As it is located in the cross-section of the uncertain and unidentified, these risks are by far the most difficult to manage. An unknown unknown is an event or impact on a project that is considered unfathomable or even unimaginable which is why they are so difficult to consider in the planning process of a project. It is furthermore difficult to provide an example of an unknown unknown as these are risks that seem unidentifiable, although this article will provide some tools to convert the unknown unknowns into known unknowns which make them easier to manage.
To summarize, the different elements can be shortly described [7]:
- The known knowns are the things we are aware of and understand.
- The unknown knowns are the things understand but aren’t aware of.
- The known unknowns are the things we are aware of but don’t understand.
- The unknown unknowns are the things we are neither aware of nor understand.
[edit] Models of uncertainty
This section introduces models to understand and manage uncertainty.
[edit] Risk classification
To simplify the classification mentioned in the previous section, the knowledge of an event’s occurrence is labeled “identification” and the knowledge of an event’s impact is labeled “certainty”. In the matrix below, the four different types of (un)certainty are portrayed [8]. The matrix is divided in to certainty and identification. The idea is that “identification” is defined as either “knowledge” or “risk”, i.e. positive or negative and that “certainty” is whether or not we know that a certain event, that can influence the project, exists. This implies that the factors or events that we know exist and have knowledge about are relatively easy to identify and manage whereas the unknown unknowns are much harder to identify and therefore manage.
[edit] The Cynefin Framework
The Cynefin Framework is a tool developed by David J. Snowden and other contributors[9] to determine contexts enabling leaders to make appropriate choices. The framework consists of five domains: Simple, complicated, complex, chaotic and disorder. The first two are placed in to the “ordered universe” where facts are applicable. Complex and chaotic are placed in the “un-ordered universe” where the relationship between cause and effect is not immediately apparent. Below, the different domains are shortly explained and linked to the above model [10]:
- The simple domain are the known knowns where it is possible to categorize the situation based on facts on the area.
- The complicated domain are the known unknowns where the situation isn’t immediately apparent, but it is possible to analyze the situation.
- The complex domain are the unknown unknowns where the outcome cannot be immediately determined but experiments will lead towards the correct direction.
- The chaotic domain are the unknowable unknowns where nothing makes sense and we search for ways to move more towards the complex domain.
- Disorder is a mix of the above domains and the situation has to be broken down in to parts to assign to the other domains.
.gif)
Much like the model described in the above section, this framework suggests that the easiest situation is the simple domain, where the known knowns are found. Furthermore, the framework provides tools for leaders to manage their way out of the above situations.
[edit] Tools
This section introduces some tools to minimize the known unknown risks or identify the unknown unknown risks.
[edit] Limitations
Here the limitations will be written.
[edit] Annotated bibliography
- ↑ https://ocw.mit.edu/courses/civil-and-environmental-engineering/1-040-project-management-spring-2009/lecture-notes/MIT1_040s09_lec24.pdf free to share and adapt under Creative Commons terms: Attribution, noncommercial, share alike (https://ocw.mit.edu/terms/) (https://creativecommons.org/licenses/by-nc-sa/4.0/legalcode). Slides by Fred Moavenzadeh from MIT
- ↑ Slides from Project Management course (42429 F18)
- ↑ https://ebookcentral-proquest-com.proxy.findit.dtu.dk/lib/dtudk/reader.action?docID=4863041&ppg=30 Project Management: "Managing Successful Projects with PRINCE2", Axelos
- ↑ Chapman, Chris & Ward, Stephen. (2002). Managing Project Risk and Uncertainty : A Constructively Simple Approach to Decision Making / C. Chapman, S. Ward. https://www.researchgate.net/publication/31747699_Managing_Project_Risk_and_Uncertainty_A_Constructively_Simple_Approach_to_Decision_Making_C_Chapman_S_Ward
- ↑ https://www.youtube.com/watch?v=GiPe1OiKQuk Donald Rumsfeld DoD briefing
- ↑ https://www.amazon.co.uk/Managing-Project-Uncertainty-Advances-Management/dp/B00SLUXH2E Managing Project Uncertainty (Advances in Project Management): Written by David Cleden, 2009 Edition, (1st Edition) Publisher: Gower
- ↑ https://marketbusinessnews.com/financial-glossary/financial-glossary-u/unknown-unknowns/ Market Business News: "What Are Unknown Unknowns? Definition And Examples".
- ↑ 8.0 8.1 Kim, S. D. (2012). Characterizing unknown unknowns. Paper presented at PMI® Global Congress 2012—North America, Vancouver, British Columbia, Canada. Newtown Square, PA: Project Management Institute.
- ↑ http://pmiswohio.org/images/downloads/Summit18/hatter_cynefin_framework_summit18_03202018.pdf Cynefin Framewok (PMI SW Ohio)
- ↑ 10.0 10.1 https://hbr.org/2007/11/a-leaders-framework-for-decision-making (Cynefin Framework). A Leader’s Framework for Decision Making, Snowden, D. J. et al. 2007 in Harvard Business Review
