What is the difference between Risk and Uncertainty?


I have sat in a lot of explorer conference talks where the presenter has told the audience they are doing this or that work program to “derisk” the exploration project.

Those who study risk know that you can only calculate risk if you have high levels of factual data. So, derisking a resource model is okay. But derisking an early stage exploration project?
No, you cannot calculate the technical risk because the density or quality or appropriateness of available data is too poor.

So the only thing you can reduce is UNCERTAINTY. That is to say, you can collect data to reduce the unknowns in the project, not improve the facts.

Probabilities of success or outcomes can be calculated with a degree of confidence only where the data is dense e.g. where the drill hole spacing is close enough. anywhere else the probabilities fall off so rapidly the accuracy of predicting the result of the next hole falls toward 1:100 to 1:1000 or worse. Such holes reduce the uncertainty a little, but not the exploration technical risk very much.

If you are a greenfield explorer you need to be supremely comfortable with extreme uncertainty to last the distance. You will kiss a lot of frogs/dogs along the way, but with a growth mindset, curiosity and a desire to learn you will (eventually) be successful. If this is not for you perhaps look to other parts of the business like resource modelling and brownfield exploration.

Interestingly, one definition of maturity is being able to cope with uncertainty. Perhaps that is why so many greenfield explorers have grey hair?