According to ISO 31000, ISO 17666:2016 and ISO 11231:2010 a risk is the effect of uncertainty on objectives and an effect is a positive or negative deviation from what is expected.
This definition recognizes that all of us operate in an uncertain world. Whenever we try to achieve an objective, there's always the chance that things will not go according to plan. Every step has an element of risk that needs to be managed and every outcome is uncertainty. Whenever we try to achieve an objective, we don't always get the results expected. Sometimes we get positive results and sometimes we get negative results and occasionally we get both. Because of this, we need to reduce uncertainty as much as possible.
Uncertainty (or lack of certainty) is a state or condition that involves a deficiency of information and leads to inadequate or incomplete knowledge or understanding. In the context of risk management, uncertainty exists whenever the knowledge or understanding of an event, consequence, or likelihood is inadequate or incomplete.
When asked to make a decision or a choice in the presence of uncertainty, an estimate is needed, since the information needed to make an informed decision is not directly available or is probabilistic, or stochastically defined (non-deterministic).
Let's define what an Estimate is ...
An estimate is not a guess, it is a value based on sampled data which has been adjusted using statistical estimation procedures. While both involve analysis of data the key difference between forecast and a projection is the nature of the assertion in relations to the assumptions occurring - from Statistical Langauge - Estimate and Projection, www.abs.gov.au
In the strict sense, an estimate is a particular value yielded by an estimator in a given set of circumstances.
The expression is widely used to denote the rue by which such particular values are calculated. It seems preferable to use the word estimator for the rule of procedure, an estimate for the value to which it leads in particular cases - from The International Statistical Institute, The Oxford Dictionary of Statistical Terms.
So What's the Point?
When uncertainty exists on projects, a risk will also exist. Making a decision in the presence of uncertainty requires estimating the outcome of that decision on the current and future level of risk. No matter how often it is stated, how often it is denied, how often unsubstantiated alternatives are provided ...
