Management Guide

Matrix - The Known-Unknown Classification of Risk


The entire subject of risk management is based on the ability of the manager to identify, value, and then mitigate the correct risks. Classification of risks is a vital step in this process. It is important to realize that there is no standard framework for classifying risks. Different people use different frameworks. One such framework was made popular by Donald Rumsfeld, who was Secretary of Defense for the United States during the subprime mortgage crisis. This framework classifies risks based on knowns and unknowns.