Unknown-unknowns-2014-v2.pdf - Creating value from uncertainty Broadleaf Capital International Pty Ltd 021 117 www.Broadleaf.com.au Discussion paper

Unknown-unknowns-2014-v2.pdf - Creating value from...

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Creating value from uncertainty Broadleaf Capital International Pty Ltd ABN 24 054 021 117 © Broadleaf 1 of 14 Discussion paper: Unknown unknowns In the ten years since the United States Secretary of Defense at that time, Donald Rumsfeld, brought the term “unknown unknowns” to prominence, its use has spread throughout the risk management community. The term itself and the confusion it creates will never go away but that very lack of definition presents an opportunity to think about what we leave out of our risk assessments. There may be things we can do to reduce these gaps and improve the quality of our assessments and the final results. This material was initially published, in two parts, in Risk Management Today issues 32 and 33, August and September 2013. Version 2, 2014
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Unknown unknowns © Broadleaf Capital International 2 of 14 Contents 1 Unknown unknowns 3 2 How do we interpret the words? 3 3 What do we know? 4 4 Generalising 5 5 Extending 7 6 Searching 8 7 Early detection 8 8 Conclusions 13 9 Acknowledgements 14 10 References 14 Figures Figure 1: Known and unknown 5 Figure 2; Cynefin framework 10
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Unknown unknowns © Broadleaf Capital International 3 of 14 1 Unknown unknowns In the ten years since the United States Secretary of Defense at that time, Donald Rumsfeld, brought the term “unknown unknowns” to prominence, its use has spread throughout the risk management community. Specialists and novices drop it into conversation and puzzle over what it means for them. It has absorbed large amounts of time in casual and professional discussions where opinions about unknown unknowns and interpretations of the term differ widely. The term itself and the confusion it creates will never go away but that very lack of definition presents an opportunity to think about what we leave out of our risk assessments. There may be things we can do to reduce these gaps and improve the quality of our assessments and the final results. Some of these are discussed here. 2 How do we interpret the words? No attempt will be made here to provide a sound definition of unknown unknowns as this has absorbed a lot of energy for many years with no clear resolution in sight. Rather than try to lay that challenge to rest, the effect it has on the way we think about risks will be examined to see if we can learn anything from the ideas it stimulates. One interpretation of unknown unknowns is that they are things we haven’t thought of that could affect us, that is there are limitations to our knowledge or awareness. It is more or less assumed that, if we haven’t given these unidentified factors any thought and they could affect us, it will be bad for us if they do occur although we can’t be certain because we are not sure wh at they are.
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