Notes

Slide Show

Outline

1	What is Risk and Risk Management
2	What is Risk
3	What is Risk – Take 2
4	Components of Risk
5	Components of Risk – Undesirable Outcome
6	Components of Risk – Event (Cause/Source of Risk)
7	Components of Risk – Probability
8	Back to the Beginning Exercise
9	Back to the Beginning Exercise
10	Back To The Beginning Exercise [Class III/BFP Prices, 1988-December 2002]
11	Overall Categories of Risk
12	Risk Increases the More You Don’t Know
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14	What is Risk Management?
15	Risk Management is Assuring An Outcome
16	Five Primary Means of Risk Management Reduce Reduce the probability that the event will occur Reduce the impact if the event does occur Transfer Transfer the cost of an undesirable outcome to someone else Avoid Completely avoid potential events thus providing a zero probability that they will occur Do Nothing Let the risk happen and be ready to bear the consequences.
17	Price Risk What Happens to the Distribution When You Have a Floor Price at $10.51?
18	What Happens to the Distribution When You Establish a Short Fence from $12.05 to 13.58?
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20	Production Risk Risk: Poor weather event causing the undesirable outcome of lower than expected yields. Risk Management???
21	Production Risk: Risk: of a poor weather event causing the undesirable outcome of lower than expected yields Risk Management???
22	Financial Risk Risk: higher interest rates causing the undesirable outcome of lower than expected income/cash flow Risk Management???
23	Financial Risk Risk: higher interest rates causing the undesirable outcome of lower than expected income/cash flow Risk Management???
24	Financial Risk Risk: higher interest rates causing the undesirable outcome of lower than expected income/cash flow Risk Management???
25	Human Resources Risk: Cost of hired labor not showing up or making a mistake causing lower production, injury, or death Risk Management???
26	Human Resources Risk: Cost of hired labor not showing up or making a mistake causing lower production, injury, or death Risk Management???
27	Human Resources Risk: Cost of hired labor not showing up or making a mistake causing lower production, injury, or death Risk Management???
28	Environmental Risk Risk: manure spill causing the undesirable outcome of fines, lawsuits, and loss of income Risk Management???
29	Environmental Risk Risk: manure spill causing the undesirable outcome of fines, lawsuits, and loss of income Risk Management???
30	Disability Risk Risk: poor health causing loss of income Risk Management???
31	So, I now know What Risk Management is, but How do I do it???
32	How??? Step 1: Be aware, identify the risks you face. Step 2: Evaluate: the likelihood that the risk will occur, and how bad the hurt will be if it does occur Step 3: Decide on how you will address the risk reduce, transfer, avoid, nothing, or some combination Step 4: Implement What is the most frustrating words used in management?? Answer: “If I had only ……” Step 5: Control Monitor to assure that what you said you would do, you did, and that you are getting what you want out of your your risk management strategies.
33	Prioritizing Which Risks to Address First
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35	Risk vs. Profitability
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