This study explores the critical yet often misunderstood distinction between risk and uncertainty. The research examines how knowledge and expertise can contribute to an illusion of control in uncertain environments, leading decision-makers to misclassify uncertainty as risk. This misclassification can lead to inadequate management of unforeseen events and suboptimal decision-making outcomes. The study introduces a novel matrix framework that categorises decision-making environments into four distinct quadrants based on knowledge, expertise, risk, and uncertainty. The framework helps decision-makers navigate the trade-off between risk and uncertainty, guiding them in assessing their current position and informing their decisions. Key findings reveal that expertise, while essential, can lead decision-makers to treat uncertainty as risk. The matrix offers guidance on how to better manage risk and uncertainty.
Faccia et al. (Wed,) studied this question.