Risks and uncertainties
Risks and uncertainties reflect unpredictable changes of environment and behaviours of people end complex systems. There are:
- uncertainty of the state (misunderstanding of events and directions of development of the environment, no possibility of changing them),
- Uncertainty of the effect (no possibility to predict external influence on the organization),
- Uncertainty of reaction (shows the types of responses to the dynamics of the environment).
Uncertainty includes changes that are difficult to calculate and events that we can not estimate due to little information.
Level of uncertainty
- Lack of uncertainty (certainty) occurs when the results can be predictable with high accuracy, for example: natural sciences, laws of physics, mathematics.
- Level 1 (objective uncertainty) occurs when the results are predictable and the probability known, e.g. gambling.
- Level 2 (subjective uncertainty), as a result we can predict, but unknown probability, eg random accidents.
- Level 3 probability and results are unknown, eg: scientific research, genetic engineering.
Risks and its sources
- Mishra, P. K. (2011). Impact of risks and uncertainties on supply chain: a dairy industry perspective. Journal of Management research, 3(2).
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