Navigating the “Unknown Unknowns” Risks

A.    Consideration of the “Unknown Unknowns” Risks

Typical classification of risks is based on the level of knowledge about a risk event's occurrence (either known or unknown) and the level of knowledge about its impact (either known or unknown). This leads to four possibilities (Cleden, 2009):

1.     Known–knowns (knowledge),

2.     Unknown–knowns (impact is unknown but existence is known, i.e., untapped knowledge),

3.     Known–unknowns (risks), and

4.     Unknown–unknowns (unfathomable uncertainty).

B.    Key Characteristics of "Unknown Unknowns"

“Unknown unknowns” are risks or events that are not only unforeseen but also unanticipated because they fall outside the realm of past experience or traditional analysis. Kim, S. D. (2012).

1.     Unpredictability

Unforeseen Events: These risks are not anticipated because they are beyond the scope of current knowledge and experience.

Lack of Historical Data: There is no historical data or precedent to predict these risks.

2.     Complex Interdependencies,

Hidden Interactions: Unknown unknowns often arise from complex interdependencies within systems, where the failure of one component can unexpectedly affect others.

Systemic Risks: They can be systemic, affecting multiple parts of a project or organization simultaneously.

3.     Emergence During Critical Phases

Critical Operations: These risks tend to manifest during critical operations or testing phases when systems are under stress.

Unexpected Failures: Despite previous inspections or assurances, systems may fail unexpectedly.

4.     Human and Environmental Factors

Human Error: Miscommunications, errors in judgment, or lack of experience can introduce unforeseen risks.

External Changes: Changes in regulations, market conditions, or natural disasters can introduce new, unanticipated risks.

5.     Difficult to Identify and Mitigate

Lack of Awareness: Since these risks are not known, they are difficult to identify and plan for.

Adaptive Strategies Needed: Mitigating unknown unknowns requires flexible and adaptive strategies, as traditional risk management approaches may not be effective.

C.    How Unknown Unknowns Happen

These risks are unforeseen and unanticipated, often emerging during critical operations or testing phases and how these unknown unknowns can occur.

1.     Complex Interdependencies: In large projects, various systems and components are interdependent. Failures in one area can trigger unexpected issues in another, which might not have been anticipated during planning.

2.     Aging Equipment: When refurbishing or reusing old equipment, hidden defects or degradation that were not detected during inspections can lead to failures.

3.     Human Factors: Miscommunications, errors in judgment, or lack of experience can introduce unforeseen risks.

4.     Environmental Changes: External factors such as changes in regulations, market conditions, or natural disasters can introduce new risks that were not previously considered.

D.    Identifying and Mitigating Unknown Unknowns

Some Action and strategies to identify and mitigate unknown unknown risks arises as  issues :

1.     Early Issue Raising:

Encourage early identification and reporting of issues, along with proposed solutions.

Encourage Proactive Reporting: Create a culture where team members are encouraged to raise issues or concerns as early as possible, even if the issues seem minor or uncertain. Often, unknown unknowns begin as small anomalies that, if caught early, can prevent larger failures.

Empower Teams to Propose Solutions: Along with identifying potential problems, encourage team members to suggest possible solutions. This fosters a proactive mindset where potential issues are not just raised but are addressed quickly.

Open Communication Channels: Ensure open and transparent communication across teams, allowing anyone to raise concerns. Tools like issue-tracking systems or regular risk review meetings can be instrumental in this process.

2.     Cross-Disciplinary Teams:

Involve experts from various disciplines to provide diverse perspectives on potential risks.

Leverage Diverse Expertise: Unknown unknowns are often hard to spot because they may fall outside the expertise of a single team or discipline. Involving experts from different fields (engineering, operations, maintenance, safety, etc.) brings a variety of perspectives, which helps uncover risks that might otherwise be missed.

Broaden the Scope of Risk Assessments: Cross-disciplinary teams can help broaden the scope of risk assessments. For example, while an engineer might focus on technical failures, a safety officer may identify human factors or environmental risks, and a project manager may foresee potential scheduling risks.

Improve Problem-Solving: When an unknown issue does emerge, a team with diverse expertise can brainstorm more comprehensive and innovative solutions than a single-discipline team.

3.     Root Cause Analysis (RCA):

When an unknown unknown occurs, perform a thorough root cause analysis to understand the underlying issues.

Some Tools and Techniques of RCA to identify and mitigate:

1.     5 Whys : This is a simple yet effective technique to drill down to the root cause by asking "Why?" five or more times until the deeper issue is uncovered. It’s useful for identifying process or management failures that contributed to the technical problem.

2.     2. Fishbone Diagram (Ishikawa):Also known as a Cause-and-Effect Diagram, the fishbone diagram helps map out all potential causes of a problem, categorizing them into areas like materials, methods, personnel, equipment, and environment. This visual tool is helpful for brainstorming all contributing factors that may have led to the failure.

3.     Failure Mode and Effects Analysis (FMEA): FMEA involves identifying all the potential ways a system or component could fail (failure modes) and analyzing the effects of those failures on the overall operation. This proactive approach not only helps prevent failures but can also be used after a failure to systematically trace its cause.

4.     Pareto Analysis: This technique uses the 80/20 rule, which suggests that 80% of problems stem from 20% of causes. By focusing on the few key causes that contribute to the majority of failures, you can prioritize corrective actions for the most significant impact.

E.    Conclusion

 Managing “unknown unknowns” is one of the greatest challenges in project risk management. These unforeseen and unanticipated risks often emerge at critical phases, complicating efforts to identify and mitigate them in advance. Given their unpredictable nature, proactive strategies such as early issue raising, cross-disciplinary collaboration, and root cause analysis are crucial for addressing these uncertainties.

The key to effectively managing unknown unknowns lies in open communication across the project team. By fostering a culture of transparency and early reporting, project members are encouraged to share concerns, no matter how minor or uncertain they may seem. Often, unknown risks begin as small anomalies, and catching them early through open communication channels can prevent larger failures later in the project.

Cross-disciplinary collaboration plays an equally vital role. By involving experts from diverse fields such as engineering, operations, maintenance, and safety, projects benefit from multiple perspectives, which are critical to uncovering hidden risks. This collaborative approach enables a more comprehensive risk assessment and more innovative solutions to unknown challenges as they arise.

Lastly, performing root cause analysis when unknown issues do surface ensures that the underlying factors contributing to these problems are thoroughly understood and addressed. Tools such as the 5 Whys, Fishbone Diagram, and Failure Mode and Effects Analysis (FMEA) allow teams to identify systemic issues and implement long-term corrective actions that reduce the likelihood of recurrence.