Introduction
Risk Management - A Decisionmaking Process
Production Risk - The Basis of All Other Farming Risk
Goal - Identify and Manage Risk to Create Opportunity
Risk Assessment and Analysis
Where to Get Answers

Interrelationship to Other Risk Factors
Financial - Cash Flow and Equity
Operating Loans
Capital Purchaes
Long-Term Financial Planning
Marketing
Cost of Production
Marketing Plans
Human Capacity
Labor Requirements
Landlord/Tenant Relationships
Long-Term Personal Goals
Public Policy
Domestic Policies
International Policies
Regulations

Sources of Production Risk
External Risk
Environmental Determined
Physical Limitations
Public Policy
Direct Risk
Production Inputs
Inputs: Fixed and variable
Timing: When to invest
Goals: Yield, profit, other
Labor Inputs
Hired/Family
Quantity: Full-time, part-time
Quality: Level of responsibility
Obligations: Conditions of employment, benefits
Public Policy Impacts
Domestic Programs: Farm program, crop insurance, conservation programs
Regulations: Environmental, financial, labor
Trade Agreements: Comparative/competitive advantage
Capital Inputs - Land, Equipment and Technology
Arrangements: Own or lease
Quantity: Efficiency, timeliness or other goals
Quality: Productivity improvements
Location: Convenience v. dispersion

Management Considerations and Responses to Risk

Production Practices
Crop Rotations
Tillage Practices
Input Selection
Labor
Custom Work
Job Descriptions
Responsibilities
Advancement
Benefits: Direct and indirect (wages/housing)
Off-Season Employment
Land
Diversification: Add or modify enterprises (integration)
Geographic Dispersion: Spread operation over larger area
Applied Technology: Modification of resource
Landlord/Tenant Relationship

Equipment and Technology

Value of Productivity Increases
Value of Timeliness
Quality Improvement
Modification of External Risks

Risk Assessment and Analysis
Decisionmaking Process
Neglect
Reactive
Proactive
Objective - Measure the rewards for accepting risk
Financial Analysis - What can I afford?
Financial Statements: Cash basis and accrual projections
Cash flow
Farm and enterprise budgets
Balance sheets
Cost of production
Lease/buy analysis
Purpose: Provide Objectivity to Analysis
Comparisons: Relate current expectations to past performance
Updating: Reflects time as the future becomes history
Variable assumptions: Yields, prices (commodity, inputs, etc.)
Marginal impacts: Effect of small changes
Sunk costs: Relationship of variable costs to fixed costs
Social Analysis - What Am I Willing to Accept?
Personal goals
Image
Psychological impact: Stress

Where to Get Answers
Public Information
Professionals - Public/Private Consultants, Lenders
Friends, Neighbors, Family
Self