A risk register records what the organisation can currently describe; uncertainty also includes what is still emerging, ambiguous or structurally difficult to quantify.
Risk registers are useful because they turn concerns into explicit objects of management. A risk can be described, assigned, analysed, monitored and connected to a response.
But portfolios operate in environments where not every important uncertainty arrives in that form.
A market may be shifting without a clear probability distribution. A new technology may create both upside and downside that are difficult to estimate. An organisational restructure may alter decision paths while programs are already in flight. One project may change the assumptions of several others. Political behaviour, resource competition and informal work may create uncertainty that is real but difficult to capture as a discrete event.
If leaders insist that every uncertainty become a conventional probability-impact entry before it receives attention, the risk system can become blind to the very conditions that matter most.
The Strategic Context
The supplied Martinsuo, Korhonen and Laine study examined uncertainty across ten R&D project portfolios. The researchers distinguish three broad sources:
- uncertainty from the external environment;
- uncertainty from organisational complexity;
- uncertainty arising from individual projects that affects the broader portfolio.
Their work is especially useful because it follows uncertainty through a chain: source, managerial interpretation, consequences and management response. It also identifies a threat bias in how uncertainty was framed and argues that rational controls alone may be insufficient in dynamic portfolio conditions.
The study is qualitative and concentrated heavily in manufacturing R&D, so its findings should not be generalised mechanically to every industry. But the management problem it exposes is widely recognisable.
Portfolio leaders are asked to make decisions when the situation is not fully knowable.
That requires a broader operating model than risk-register administration.
Related article: Portfolio Management Is Not a Rational Optimisation Problem
What Leaders Commonly Misread
The first misread is that risk and uncertainty are the same thing.
In management practice, the terms are often used loosely. A useful distinction is that a conventional risk is sufficiently defined to support some assessment of likelihood, impact, ownership and response. Broader uncertainty may be less structured. The event may not be clear. The range of outcomes may be unstable. The causal mechanism may be contested. The organisation may not yet know what it needs to know.
The second misread is that uncertainty always comes from outside.
The Martinsuo study specifically identifies organisational complexity as a source. Portfolio uncertainty can be created internally through:
- resource overcommitment;
- competing governance systems;
- fragmented information;
- interdependencies;
- political negotiation;
- shifting priorities;
- different rules for different projects;
- unclear organisational interfaces.
This matters because leaders sometimes treat uncertainty as an external force to be monitored while ignoring the uncertainty their own structures generate.
The third misread is that more analysis will always reduce uncertainty enough for a confident decision.
Sometimes it will.
Sometimes the information simply does not exist yet.
The better response may be an experiment, an option, a phased commitment, a changed structure or a trigger-based decision rather than another attempt to calculate certainty.
Reframing the Issue
Portfolio uncertainty management is the discipline of preserving decision quality when the situation cannot be fully reduced to known risks.
That requires leaders to distinguish between different types of not-knowing.
Known exposure
The issue is defined and can be assessed through established risk methods.
Use normal risk analysis and response.
Estimable uncertainty
The range of outcomes is uncertain, but scenarios, ranges, sensitivity analysis or simulation can improve understanding.
Use analytical methods without pretending the estimate is precise.
Emergent uncertainty
The organisation does not yet know enough to define the issue well.
Use sensing, experimentation, staged funding, options and review points.
Structural uncertainty
The uncertainty is generated or amplified by the organisational system itself.
Use governance, role, dependency, process or organisational redesign.
This classification avoids forcing every situation through the same tool.
External Uncertainty Changes the Portfolio's Assumptions
The Martinsuo study includes market, technology, regulatory, supplier and customer-related uncertainty as external sources.
The portfolio implication is important.
External uncertainty does not merely affect project execution. It can invalidate the reason the project exists.
A market shift can change expected benefits. A technology change can make an architecture obsolete. A supplier event can alter the economics of several projects simultaneously. Regulation can increase the value of one initiative and destroy another.
This is why external sensing should feed portfolio governance, not remain isolated in corporate strategy or risk functions.
Related article: The Portfolio Lifecycle Is a Strategic Feedback System, Not an Annual Planning Cycle
Organisational Complexity Can Manufacture Uncertainty
Some uncertainty is self-created.
Imagine a business running several transformation programs while different functions maintain separate prioritisation rules. One team sees a project as critical. Another has already reallocated the people required to deliver it. Finance changes the budget assumption. Operations changes the implementation window. The portfolio reports each change separately, but no one owns the combined effect.
The problem is not lack of probability data.
It is system design.
The appropriate response may involve:
- consolidating decision rights;
- clarifying interfaces;
- changing sequencing;
- creating a common demand process;
- exposing hidden work;
- reducing concurrency;
- restructuring governance.
A risk register can record the symptoms, but it will not redesign the system.
Single Projects Can Create Portfolio Uncertainty
The third source is the project level.
Changes in scope, schedule, resource use, technical performance or customer requirements can propagate because projects are interdependent.
A project that looks locally contained may change assumptions elsewhere.
This is especially important when:
- projects share technology;
- multiple components depend on one platform;
- scarce specialists support several initiatives;
- one product launch changes the market case for another;
- a delay changes the sequencing of a program;
- learning from one project should alter another.
Portfolio leaders therefore need mechanisms for recognising when a project-level change becomes a portfolio-level uncertainty.
Related article: Interdependencies Are Portfolio Risk: Why Project Dashboards Miss the System
Rational Controls Are Necessary but Not Sufficient
The Martinsuo study examines rational, structural and cultural-political mechanisms for managing uncertainty.
This distinction is valuable because organisations often default to rational control:
- more data;
- more analysis;
- more forecasts;
- more metrics;
- more review meetings.
These mechanisms are useful when the uncertainty is analytical.
They are weaker when the cause is structural or behavioural.
If information is withheld because teams do not trust governance, another dashboard is unlikely to solve the problem.
If resource conflicts are created by competing authority structures, another risk score may add visibility without changing the conflict.
If managers interpret uncertainty differently, negotiation and shared sensemaking may be required.
The response should fit the source of uncertainty.
Decision Framework: Match the Response to the Uncertainty
When a material uncertain issue emerges, ask six questions.
1. What do we actually know?
Separate facts, estimates, assumptions, interpretations and unknowns.
2. Where does the uncertainty originate?
Environment, organisational system, project component or interaction between them?
3. Can it be quantified credibly?
If yes, use appropriate risk analysis. If not, do not manufacture a number merely to satisfy process.
4. How reversible is the decision?
Low-reversibility decisions require stronger evidence, options or staged commitment.
5. What control type fits?
Analytical, structural, cultural, contractual, experimental or governance-based?
6. What would we need to learn next?
Define the signal, experiment, milestone or external event that would reduce uncertainty enough for the next decision.
This turns uncertainty into a learning and governance problem rather than a documentation problem.
Using Options Instead of False Certainty
When uncertainty is high, leaders often feel pressure to choose between full commitment and delay.
There is usually a third path: preserve an option.
A portfolio can:
- fund a pilot;
- stage investment;
- reserve capacity;
- design modular architecture;
- maintain two suppliers temporarily;
- negotiate contingent contract terms;
- create a decision gate tied to specific evidence;
- run parallel discovery before committing to scale.
These choices have a cost. Flexibility is not free.
But where decisions are expensive to reverse, paying for flexibility can be rational.
The portfolio should therefore evaluate the value of learning as well as the value of immediate execution.
From Strategy to Execution
Immediate action should add an uncertainty review to material portfolio decisions. Ask which issues are being forced into risk-register form despite weak knowledge.
Medium-term capability building should develop several response modes: conventional risk analysis, scenarios, experiments, options, structural intervention and adaptive governance. Portfolio teams need more than one management instrument.
Long-term strategic positioning requires the organisation to become better at sensing and reconfiguration. Martinsuo and colleagues connect this to the idea of portfolio management as a dynamic capability: the ability to notice change, interpret it and alter the portfolio during deployment rather than only during annual selection.
That is a more demanding standard than risk compliance.
It means the portfolio must be able to learn while it is moving.
Signals to Monitor
The organisation may be mistaking uncertainty for ordinary risk when:
- executives demand single-point probability estimates for issues with little evidence;
- risk registers grow while strategic surprises remain frequent;
- many uncertain issues are classified as “monitor” because no credible response exists;
- teams hide ambiguity until they have a number that looks defensible;
- portfolio reviews discuss project risks but not changing assumptions;
- structural problems repeatedly appear as separate project risks;
- projects continue unchanged while market or technology conditions move;
- leadership adds reporting rather than changing governance when uncertainty is generated internally.
A stronger signal is that managers can say, without embarrassment, “we do not know yet”, and then specify what the organisation will do to learn before committing further.
References
- Martinsuo, M., Korhonen, T. & Laine, T. 2014, 'Identifying, framing and managing uncertainties in project portfolios', International Journal of Project Management, vol. 32, no. 5, pp. 732-746.
- Teller, J. & Kock, A. 2013, 'An empirical investigation on how portfolio risk management influences project portfolio success', International Journal of Project Management, vol. 31, no. 6, pp. 817-829.
- University of South Australia, Portfolio Risk Management, Week 06 teaching materials supplied for this synthesis.
Questions for the Leadership Team
- Which portfolio uncertainties are genuinely quantifiable, and which are only being made to look quantifiable?
- How much uncertainty is generated by our own structures, resource conflicts and governance systems?
- Which project-level changes could alter the assumptions of multiple portfolio components?
- Where should we use staged commitments or experiments instead of demanding premature certainty?
- Do our risk processes make it easy for people to surface ambiguous issues before they become defined problems?
- Which uncertainties require structural or cultural action rather than additional analysis?
- What does the portfolio need to learn before the next irreversible decision?
Closing Perspective
Risk management gives leaders a disciplined way to manage many known exposures.
Portfolio leadership needs one capability more: the ability to act intelligently when the exposure is not yet fully known.
That requires humility about what can be quantified, stronger sensing, flexible decision structures and a willingness to redesign the system when the system itself is producing uncertainty.
A mature portfolio does not put every unknown on a risk register.
It knows when to measure, when to learn, when to restructure and when to preserve the option to decide later.
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