In The End of Alchemy, former Governor of the Bank of England Mervyn King distinguishes between two kinds of unknowns concerning the future:
In coming to terms with an unknowable future, it is helpful to use the distinction between risk and uncertainty introduced in 1921 by the American economist Frank Knight. Risk concerns events, like your house catching fire, where it is possible to define precisely the nature of the future outcome and to assign a probability to the occurrence of that event based on past experience. […] Uncertainty, by contrast, concerns events where it is not possible to define, or even imagine, all possible future outcomes, and to which probabilities cannot therefore be assigned.
Distinguishing between risk and uncertainty is crucial …
- Because we systematically neglect thinking about uncertainty, and …
- Because our neglect of uncertainty steers us towards “optimizing” rather than “coping”, to the detriment of our futures.
Darn Ecology 