Perspectives on risk and the unforeseen

• Black swans in a risk management context should be reserved for “unknown unknowns”.
• Definitions by Aven and Krohn to include risks beyond “unknown unknowns” is unfortunate.
• Cases illustrate how definition by Aven and Krohn may give misleading & unfortunate effects
• Oil companies have for a long time neglected the uncertainty aspect of the risk element.
• Proposed revision of the regulations by PSA is appropriate.

Black swans have been discussed lately. Some recent contributions to the understanding of black swans have been provided by Aven [1] and Aven and Krohn [3]. It is important to be aware of events which may come as complete surprise, which creates uncertainty in the risk assessment. This is consistent with the proposed revision of the definition of risk by Petroleum Safety Authority (PSA) [Norway]. But we should at the same time also try to look beyond this and see how we can use this concept to avoid serious accidents or at least reduce the consequences should accidents occur. In this paper we proposed to restrict the black swan concept to unknown unknowns. Cases illustrate how the wider definition may lead to misleading and unfortunate effects that will not lead to good risk management practices. The wider definitions proposed by Aven & Krohn are proposed to be counterproductive if seen in a risk management context.