Problems come in three flavors: Known (e.g. my car has a mechanical problem), Knowable (e.g. my car will likely have a mechanical problem if I don’t service it), Unknowable (no example here; its unknowable!). It is the same with Risk in investments. Author Nassim Taleb describes risk in these terms in the attached interview: Nassim Taleb on Living with Black Swans. (Click on the title to read a pdf).