There is a lot on misunderstanding in interpretation of risk and uncertainty. To understand the difference between these two terms begin by exploring what is meant by “risk”. In general, risk is the chance of injury, damage, or loss (Webster’s New World Dictionary).
Risk: We don’t know what will happen in future, but we do know the distribution of future outcomes.
Uncertainty: We don’t know what will happen in future, and we don’t know what the possible outcome distribution is.
In other words, the future is always unknown — but that does not make it “uncertain.”
Although the definitions we have just provided are very simple, they can explain a lot when going into details.
