2. The Risk Management Process

3. 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.  

4. 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.

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

6. 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

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

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

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

10. 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

11. 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)