1. Risk management Jim Dunn AG BM 460 "To fail to plan is to plan to fail."

2. Introduction Risk management is complicated New vocabulary New way of thinking Many resources available

3. Cheese Plant What are some risks a plant might face that could put them out of business?

4. Sources of Risk Production Marketing Financial Legal Human Resources

5. Identify your sources of Risk Financial Production Liability Health Accident Environment Food safety

6. Ways to Manage Risk Retain – forward purchase and store Shift – insurance - hedging Reduce – take precautions – safety training Self-insure Avoid - do less risky things

7. What Is Your Risk Tolerance? Reflected in the ways you choose to manage risks. Understanding your choices and considering each of them may cause you to change your management style to more closely reflect your tolerance for risk.

8. Enterprise Diversification Diversification is an effective way of reducing income variability.

9. Insurance Casualty Crop Life Liability Environmental liability Health

10. Contracts Can reduce risk Can create diversification – broiler house Can improve management

11. New Technologies Can reduce or increase risk Evaluating them is tough

12. Records Managing risk and good records go hand in hand Good records don’t manage risk Provide much of the information needed to understand critical financial risks

13. UNDERSTANDING FINANCIAL RISK What are my short-term and long-term goals and how do they affect my financial planning? Was documented historical information used in my financial projections? Was it accurate? Which records do I need to monitor the financial status of my operation?

14. UNDERSTANDING FINANCIAL RISK Which records do I need to document my borrowing requests? Which farm record and financial analysis packages might help me? What have been the trends in my business’s key performance indicators? How do the ratios for my operation compare to those of similar operations?

15. Ownership Structure Sole proprietor Partnership Cooperative Family Corporation Public corporation

16. Some examples? A farm A feed mill A food processor A grocery store A restaurant – our Mexican restaurant in Brother’s Pizza site

17. Futures markets basics Basic vocabulary Long vs. short Speculation vs. hedging Margin calls Basis Farmer who takes no action is speculating

18. Concluding Comments Doing nothing is not a plan Insurance is essential Beyond that identifying the sources of risk is the starting point Once you do that then you can develop a plan