Welcome to Risk Management & Contingency Planning
This course is designed to help you actively work through your risk management decisions, not just learn about them.
As you move through each lesson, you’ll use the Risk Management Workbook to reflect on your own operation, identify risks and build a practical plan you can use beyond this course. Each section builds on the last, so you’re encouraged to complete the lessons in order and pause as needed to complete the workbook exercises.
Download the Risk Management Workbook
Approximate time to complete the course:
-Videos: 20 minutes
-Workbook completion: 3-4 hours
- How to Use This Course
- Work through each module at your own pace
- Complete the corresponding workbook activities as they are introduced
- Apply the questions and examples directly to your own farm
- Use your completed workbook as a living document you can revisit and update over time
You don’t need to have everything “figured out” as you start, this course is designed to help you think through uncertainty, prioritize what matters most and make informed decisions based on your goals and risk tolerance.
- What You're Working Toward
By the end of this course, you will have:
- Identified the key risks affecting your operation
- Evaluated their potential impact and likelihood
- Prioritized the risks that matter most to you
- Built a customized, written risk management plan
- Established a process for monitoring and updating your plan over time
Before You Begin
Keep your Risk Management Workbook accessible and give yourself time to reflect honestly as you complete each section. The value of this course comes from applying it directly to your operation, not from rushing through the material.
When you’re ready, start with Section 1: Definition of Risk Management.
- Section 1: Definition of Risk Management
Review the definitions below, and then complete the two workbook prompts in Section 1 of your workbook:
Merriam Webster: Risk is the possibility of loss or injury, Management is the judicious use of means to accomplish an end.Paraphrased from USDA: Risk management involves adopting strategies that can mitigate negative financial effects from uncertainties such as prices, yields, weather, global markets, etc.
- Section 2: Importance of Risk Management in Agricultural Operations
The ability to manage risk varies based on an operation's financial position and resources. Regardless of size or current market conditions, having a risk management plan will eventually prove beneficial, so it's wise not to be without one.
Watch the video and complete Section 2 of your workbook.
- Section 3: Types and Sources of Risk
It is essential to understand the types of risk that may impact your farm business.
For each risk type, answer the questions in Section 3 of your workbook as they relate to your farming operation.- Section 4: Assessing the Impacts of Risk
Before developing a risk management plan, it's crucial to evaluate the potential impacts of risks on your farm business. Consider the likelihood of these risks occurring, their level of impact, which risks you can directly control or influence and possible strategies for mitigation.
Follow the steps in Section 4 to complete the Section 4 worksheet.
- Section 5: Risk Tolerance
What is your overall financial position or risk tolerance?
Generally, a stronger financial profile offers the ability to accept more risk, as adversity can more easily be absorbed without long-term impacts. The margin of error is different for each operation depending on its financial health and resources.
Rate your risk tolerance in Section 5 by placing an “X” on the chart.
- Section 6: Creating Your Risk Management Plan
After going through the thought processes on the previous pages, you can begin to build out your risk management plan depending on the goals of your farm business and the priority risks you want to mitigate.
To create a risk management plan for your farm, focus on your business goals and priority risks. Keep it simple; effective strategies don't always require financial advisors or complex insurance. For example, cattle producers might stockpile hay to prepare for droughts or increase hazard insurance on equipment to recover from a fire.
Complete the risk management plan by filling out the chart in Section 6 of your workbook.
- Section 7: Monitor and Review Your Plan
No plan is useful without regular monitoring, measuring, and adjusting as needed.
Set goals of how frequently to assess the value and relevance of your plan. That may be at regular intervals, such as semi-annual or annually, or as enterprises or farm business evolves due to market conditions, growth goals, etc.
Complete the chart in Section 7 of your workbook.- Section 8: Additional Tools and Resources
As part of your next steps, don’t forget to complete Section 8 in your workbook, where you can list additional tools and resources, such as insurance agents, legal consultants and financial advisors, who can support you in building a strong plan.
Complete the chart in Section 8 of your workbook.
KNOWLEDGE CENTER IMPORTANT NOTICE AND DISCLAIMER
The materials contained within this knowledge center are provided for educational and informational purposes only and do not constitute legal, financial, tax, or investment advice on any matter. We do not warrant that the materials provided are current and up-to-date with applicable laws and practices. You should not act or refrain from acting based on these materials or the information they contain without seeking legal advice from an attorney licensed in your jurisdiction or other appropriate professionals. To the fullest extent provided by law, Farm Credit of the Virginias, ACA, will not be liable for any loss or damage caused by your reliance on these materials or any information contained in this knowledge center. Your use of the materials and information is at your own risk, and by accessing the knowledge center, you hereby waive and hold harmless Farm Credit of the Virginias from any claims resulting therefrom.