Risk Management

It is important to plan for risk in all aspects of your farm business operation. These risks include:

  • production risks
  • market risks
  • financial risks
  • human resource risks
  • policy risks

Continually assess the security of your operation to reduce the probability and impact of adverse events.

Questions to Ask

As an agricultural business manager, you should ask yourself the following questions to mitigate different types of risk.

Production Risk

  • How well do you follow good production practices?
  • Are you prepared to handle diseases and pests, machine readiness for operation, and labour availability?
  • Do you manage the production risk through government programs for the maximum benefit of your operation?

Market Risk

  • Do you have a marketing risk strategic plan and knowledge of marketing tools to deal with adverse market conditions?
  • Do you receive current and accurate market information?
  • Can you identify trends in prices?

Financial Risk

  • How secure are your financial arrangements with lending agencies?
  • Will the current levels within your production insurance coverage meet your cash flow requirements?
  • What is the worst-case scenario for production loss?

Human Resources Risk

  • Do you have a plan to deal with loss of labour or management skills?
  • Have you implemented a human resources strategy?

Policy Risk

  • Are there national or international policies that will negatively affect your markets?
  • Do you have a plan to deal with changes in government policy and regulation?

Farm Business Risk Assessment Profile

Managing the Modern Farm Business is a series of modules designed to help in developing the necessary concepts and skills essential to effectively manage a farm business.

The first of the Risk Management Modules examines the predisposition to risk of the manager:

The second module explores the compounding effect that financial risk has on business risk:

The third module presents methods that the manager can use to calculate risk exposure and compare alternate actions:

The fourth module outlines the ways that effective farm managers can reduce overall risk exposure: