Definition

unknowable risk

Contributor(s): Francesca Sales

An unknowable risk is a potential threat that is not known and cannot be quantified or controlled. 

Unknowable risks are different from unknown risks, which are operational risks where the event that could cause a loss is known, but the probability of its occurrence is difficult to predict. An unknowable risk is also known as a black swan event.

Unknowable risks are a form of sunk costs. They are totally unpredictable which makes it difficult for chief risk officers to put adequate control mechanisms. To manage unknowable risks, companies should ensure business processes remain flexible, ensuring variable costs and diversifying across products and markets whenever possible. Businesses should also employ experienced risk managers and make sure that the data collected from organization-wide risk assessments is accurate and up-to-date.

 

This was last updated in July 2014

Continue Reading About unknowable risk

Dig Deeper on Risk management and compliance

PRO+

Content

Find more PRO+ content and other member only offers, here.

Join the conversation

1 comment

Send me notifications when other members comment.

By submitting you agree to receive email from TechTarget and its partners. If you reside outside of the United States, you consent to having your personal data transferred to and processed in the United States. Privacy

Please create a username to comment.

How does your organization prepare for unknowable risks?
Cancel

-ADS BY GOOGLE

File Extensions and File Formats

Powered by:

SearchCIO

SearchHealthIT

SearchCloudComputing

SearchDataCenter

SearchDataManagement

SearchSecurity

Close