Question

Examples of "unknown unknowns" as they relate to a company's credit risks.

Answer 1

Unknown unknowns are future outcomes, events, circumstances, or consequences that we cannot predict. We cannot plan for them either. We don’t even know when and where to search for them.

Unknown unknowns is a common term in strategic planning and project management. Project management involves planning, organizing, and managing many things, including a team to see through a project’s completion. Strategic planning is a company’s or organization’s process of defining it's strategy.

“Future circumstances, events, or outcomes that are impossible to predict, plan for, or even know where or when to look for them.”

The unknown unknowns are things we are neither aware of nor understand.

Examples of unknown unknowns are

1. Forecasting errors

2. Estimating errors

3. Budgeting errors

All these unknowns relate to company's credit risk in the way all the finance providers will provide funds by trusting all the projections and forecasting done by the organization.

If that information was wrong the trust of those finance providers will get disturbed, they may not provide the funds to organization.

These are all the information required to solve the given question.

I hope, all the above mentioned information and explanations are useful and helpful to you.

Thank you.