Risk is a discrete event which if it occurs may have a negative (a threat) or a positive (an opportunity) impact on your project. A risk usually has a probability of occurring (the likelihood) and an impact (both cost and time).
There isn’t much in life, which is certain, most things have some degree of uncertainty surrounding them. This is particularly applicable to predicting future events as often even if they have occurred before, a replication of that event is not a certainty.Uncertainty is usually a band around the prediction, which will comprise an optimistic view and a pessimistic view.
A Real-Life Example Of Both:
How long does it take you to get to work? A question that you may be asked which explains the difference between risk and uncertainty perfectly. Lets suppose your normal answer to this is 30 minutes.
Usually your journey to work will take around 30 minutes, but it will very rarely or almost never, take exactly 30 minutes. If you manage to get through every traffic light and junction immediately as you arrive at them the journey may be achievable in 28 minutes and conversely if you get stopped at every light and junction, it may take 35 minutes. This is uncertainty. The optimistic time it takes to get to work is 28 minutes and the pessimistic time it takes is 35 minutes with the most likely being around 30 minutes.
So we have established that the range of time it takes to get to work is between 28 minutes and 35 minutes depending on traffic conditions. However, what would happen if the road you usually take was closed for repair, or on your journey you got a puncture.
These are both examples of event risks which could impact your journey but will not always occur.
The road you take may be closed for repair once every 12 months so the probability of it happening is relatively low and the impact will also be relatively low, it may add 10 minutes to the overall journey based on taking a minor detour.
Having a puncture is also an infrequent occurrence as you may only have a flat tyre once or twice a decade, however the impact of this would be much higher as it may add hours to your usual journey time so in respect to your 30 minute journey time, this has a large impact.
You will also note that within these two examples you can apply responses to the risks listed. For the road closure, you could mitigate the impact by leaving 10 minutes earlier which will mean you wont be late, although the journey time will be the same or you can take an alternative route avoiding the closure all together. For the puncture, you can mitigate the impact by having a subscription with the AA or RAC or other breakdown service which should decrease the time impact, or you can avoid the risk all together by fitting run flat tyres to your car.