Question

How can companies manage unknown and unknowable risks?

All assignments must include at least one full page in APA format with at least two outside references.

Answer 1

An unknowable risk are potential threats that are unknown and unquantifible at the moment.

Unknowable risks are also known as black swan events, for instance the sudden pandemic that is taking place due to Covid-19.

Unknowable risks have the following characteristics :

1. Rare events
2. Beyond normal expectations
3. Has a catastrophic / significant impact on the economy as a whole

Unlike unknown risks, unknowable risks cannot be mitigated against, however there are certain principles that would help some recover:

1. Light organizational structure
2. Quick on the feet thinking , to cut losses quickly and drastically
3. Having alternative approaches and business plans ready, so that changing course could be faster.

Flexibility is the best way to trying to manage the unknowable risks, and recover from contingies.