Uncertainty
Uncertainty is a characteristic of a state in which complete, precise, or reliable information necessary for making informed decisions or predicting future events is absent. In systems analysis and management, uncertainty is interpreted as an objective or subjective limitation of knowledge about the current or future state of a system, its external environment, or the actions of its agents.
Uncertainty can manifest in the form of:
- a lack of information about the external environment;
- the inability to accurately assess the consequences of alternative decisions;
- ambiguity in the interpretation of available data.
It is a key concept in disciplines such as systems analysis, decision theory, risk management, economics, and engineering.
General Characteristics
Uncertainty can arise in many situations and is characterized by a number of random or unknown factors. The distribution of these factors is:
- in some cases, known in advance,
- in others, unknown or only partially known.
Furthermore, uncertainty is often associated with external actions:
- by an adversary (in military planning),
- by a competitor (in the business sphere).
Classification of Uncertainty Factors
As an example, a classification of factors influencing the degree of uncertainty is provided, taken from the first work on systems analysis dedicated to military planning issues (see diagram).
Uncertainty in Organizational-Economic Systems
The problem of uncertainty is clearly examined in the work of E. A. Kuzmin, "Uncertainty in Economics: Concepts and Provisions." The author identifies seven key provisions:
- A measure of information availability. Uncertainty is viewed as an indicator of the volume and quality of available information.
- Variability of choice. The possibility of alternative choices, a multitude of possible event developments.
- Quality of information. Uncertainty determines the reliability, completeness, value, relevance, and clarity of information.
- A source of risk. Uncertainty acts as an attributive (inherent) source of managerial and economic risk.
- Ambiguity of realization. Factors of an unknown nature create ambiguity in the realization of events.
- A limiter of controllability. Uncertainty naturally limits the controllability and stability of an organizational-economic system.
- State in relation to "ideal conditions". Reflects the degree of deviation of a real system from its hypothetical "ideal" functioning.