Every art and industry has its fair share of esoteric terms, and project risk management is no different. John Goodpasture gives a few comments on some $10 words in risk management, dividing them into two basic types. The first type is the unknown that might be learnable with some effort, and the second type is the unknown that will likely remain a mystery.
Into the Unknown
For the first type, Goodpasture brings up the word “epistemology,” which involves understanding the nature and scope of knowledge. As it pertains to risk, it becomes “epistemic risk,” a risk which can be better understood with research. These are the best kind of risks, because there are steps that can be taken to address them. And when epistemic risks are placed into an organized framework of knowledge, they sometimes become known as “ontological risks.”
About the second type, Goodpasture says:
For the second case, it's all about the hidden, latent, unknowable (you may not find out what you don't know to ask, etc) that just happens by chance. For example, games of chance, like dice, you simply have no way of knowing what is going to come up next. There's no question you can ask to find out. And, the games are “memoryless” and thus independent; the former outcome has no bearing — seemingly — on the next outcome.
These risks are “aleatoric risks,” pertaining to chaotic outcomes, but you can still play with the probabilities to rein them in to an extent.
So there you have it, some expensive new words for you to spend this weekend! You can read the original post here: http://www.johngoodpasture.com/2014/11/10-words-in-risk-management.html