Risk and Uncertainty

The Institute of Risk Management’s “A Risk Management Standard” defines risk as the combination of the probability of an event and its consequences.

A risk is connected to an event, its probability, and its consequences.

An event that has no probability of happening does not pose a risk.  There is no risk that your project team will be kidnapped by aliens tomorrow.

An event that has a 100% chance of happening should not be treated as a risk.  If you do not pay your employees, do not place in your risk register that “my employees might not want to work without pay.”

If the event has no consequences for you, it is not a risk.  The collapse of the Nigerian stock market may affects thousands of people, but of no consequence to you (presuming you have no investments there).

If the event (if it occurred) has a positive impact on you, you can take advantage of that by treating it as a risk.