Bovine spongiform encephalopathy (BSE) in sheep has not been identified under natural conditions at the time of writing and remains a hypothetical issue. However, rumours about the possible finding of a BSE-like isolate in sheep have led to great unrest within the sheep industry, among the general public and within governmental and regulatory bodies. The difficulties of implementing a proper risk assessment and pre-emptive measures, in the absence of a confirmed case, are described. The authors attempt to list what is known about experimental BSE in sheep, the distribution of infectivity in the host, some aspects of risk assessment and management and the most promising methods for differentiating BSE from scrapie in the same host. As for the latter, new and promising methods are being developed and appear suitable for initial screening of isolates of transmissible spongiform encephalopathies, but in the absence of proper validation, use of the 'classical' strain-typing in a mouse panel is still indicated.