Chapter 2
Uncertainty, risk and opportunity
An optimist sees the opportunity in every difficulty, a pessimist sees the difficulty in every opportunity.
—Sir Winston Churchill
This chapter explores the implications of distinguishing between risk and opportunity from an uncertainty management perspective, building on the Chapter 1 view of uncertainty in and around projects. This chapter’s starting point is contexts when quantification of uncertainty using probability distributions facilitates an effective appreciation and treatment of both risk and opportunity in relation to underlying uncertainty – but objectives that do not lend themselves to quantification are considered later.
Chapter 1 began with very simple definitions for uncertainty, risk and opportunity:
‘uncertainty’ is ‘lack of certainty’,
‘risk’ is ‘possible unfavourable outcomes’,
‘opportunity’ is ‘possible favourable outcomes’.
As noted in Chapter 1, these are nominal/default definitions, and are as simple and unrestrictive as we could make them. With these definitions, it might be expected that the relative attention paid to ‘risk management’ or ‘opportunity management’ in a project context would depend on the degree of pessimism or optimism exhibited by project managers. However, much depends on how possible unfavourable outcomes are distinguished from possible favourable outcomes – and from whose perspective – as well as the extent to which possible responses to risk are treated as opportunities to enhance performance, ...
