The Risk Management Process

The Risk Management Process Making sound management decisions begins by using a good risk management process.  The diagram on the screen illustrates an effective process that can be used and re-used on a regular basis.  

The Risk Management Process Communication & Consultation Communication and consultation with internal and external stakeholders should take place at each stage of the risk management process as they make judgments based on their perception of risk.

The Risk Management Process Internal Context Resource inventory Risk tolerance Identify the enterprise

The Risk Management Process External Context External context is the external environment in which the farm or ranch seeks to achieve its objectives. Legal & regulatory requirements Stakeholder perceptions Market conditions Other aspects of external risk

The Risk Management Process Objective(s) Involved Risk criteria (goals) What does success look like?

The Risk Management Process Risk Identification ID sources: production, market, institutional, financial, human risk Describe level of control

The Risk Management Process Risk Analysis Identify threats Describe consequences (positive/negative) Evaluate likelihood of occurrence Consider existing strategies

The Risk Management Process Risk Evaluation Identify risks that warrant treatment Repeated decisions Large consequences Consider threat/opportunities in light of risk criteria, risk tolerance Select a strategy

The Risk Management Process Monitoring & Review Monitoring and review should be a planned part of the risk management process: Evaluate changes in internal/external context Evaluate changes in risk exposure Evaluate effectiveness of treatment options (measure success)