Uncertainty

From Open Risk Manual

Definition

Uncertainty is defined as the lack of knowledge. Any situation in which the current state of knowledge is such that: the order or nature of things is unknown; the consequences, extent, or magnitude of circumstances, conditions, or events is unpredictable; and, credible probabilities to possible outcomes cannot be assigned. Uncertainty can result from lack of information or from disagreement about what is known or even knowable. Uncertainty depends on the analyst’s state of knowledge, which in turn depends on the quality and quantity of applicable data as well as knowledge of underlying processes and inference methods.

  • Quantitative definition: Measurement that characterizes the dispersion of values that could reasonably be attributed to a parameter.
  • Qualitative definition: A general term that refers to the lack of certainty in data and methodology choices, such as the application of non-­representative factors or methods, incomplete data on sources and sinks, or lack of transparency.

Quantitative uncertainty implies that the lack of knowledge of the true value of a variable can be described as a PDF characterising the range and likelihood of possible values.