Decision making in uncertain environments is key to the successful delivery of oil and gas projects. By definition, however, uncertainty is ambiguous and unpredictable.
Uncertainty does not necessarily imply risk; the two are separate concepts. Economist Frank Knight made a clear distinction between the two as far back as 1921. Risk can be measured and quantified and is well suited to the analytical techniques used in project risk management; uncertainty defies quantitative expression. Items with the quality of uncertainty often surface during risk-assessment exercises but tend to be categorized as “issues” and are neither captured nor addressed by traditional risk-management processes.
There are known knowns; there are things we know we know. We also know that there are known unknowns; that is to say, we know there are some things we do not know. But there are also unknown unknowns; the ones we don't know we don't know.
— U.S. Secretary of Defense Donald Rumsfeld, 2003
Donald Rumsfeld’s infamous quote highlights the difficulty of articulating uncertainty. However, the statement is rooted in sound cognitive and sociological theory and makes an important point about the perils of taking our individual and shared perceptions for reality. The philosopher Slavoj Žižek (2006) suggests that there may also be a fourth category of “unknown knowns”—those things that we intentionally refuse to acknowledge due to, for example, the social stigma around dissent. While we may feel confident dealing with “known knowns” and “known unknowns,” how can we hope to discover the “unknown unknowns” and uncover the “unknown knowns”?...
Management: Managing Project Uncertainty: The Delphi Method
Lakshan Saldin, Matthew Healey, and Kate Parker, Agilis KLM
01 March 2016