- The total range of events that may happen and produce risks (including both threats and opportunities) affecting a project. (Uncertainty = threats + opportunities.)
- All events, both positive and negative whose probabilities of occurrence are neither 0% nor 100%. Uncertainty is a distinct characteristic of the project environment.
- noun a situation in which the true facts are not known which makes it impossible to predict what will happen in the future; the decision-maker has to make difficult decisions.
- The estimated amount by which a measured or calculated value differs from the true value. Expressed, for instance, in terms of standard deviations.
- (written as Uncertainty)
Usually applied to future events, costs and benefits even though the reliability of evidence about past events and their interpretation is also and notoriously subject to many uncertainties. The trouble is that our knowledge can be only finite, while our ignorance must necessarily be infinite (Popper, 2002, p. 38). Sometimes attempts to 'quantify' uncertainty are made by assigning probabilities based on past experience or derived by judgments of various kinds. Sometimes alternative scenarios of the future are devised. Out of the infinity of possible futures, the art lies in trying to narrow down the range to a manageable set of imaginable possibilities that, between them, encompass what are seen as the main characteristics of these possibilities. The reduction of uncertainty about the financial consequences of ill-health (health care expenditures and loss of earnings due to sickness) is the principal advantage of and rationale for health insurance.
Analysts distinguish between stochastic uncertainty (sometimes ' first-order uncertainty ') and subjective uncertainty (sometimes ' sec- ond-order uncertainty '). The former is uncertainty arising from randomness in the data studied. The second is uncertainty relating to parameter values and is due to insufficient knowledge.