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minding your business Seven risk management steps


The traditional view of risk is negative but it doesn’t have to be. Risk can be both an opportunity and a threat. By Suzanne Deutsch


Canadian Farm Business Management Council


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any Canadian farmers are bracing for a wet spring in 2011 and wet soils are for the most part, cold soils. Plants take longer to emerge under such conditions, which allow more time for them to be infected by root rots.


On the Prairies, for example, no one has done research on which varieties can handle flood-like conditions since the region is more likely to be affected by heat, drought and frost than wet and saturated conditions. As a result, planning crop rotations and other decisions will no doubt be very daunting.


Using risk management tools can be helpful to analyze what happened last year in order to make sure it won’t colour one’s decision-making process for the upcoming year. Dr. David Hillson’s seven-step risk process can help you examine how you should respond when you are faced with an uncertain situation. This might give you a clearer picture of what you and your business are hoping to accomplish. Hillson is a well-respected international consultant and trainer, author, and speaker on the topic of risk management.


He explains that the traditional view of risk is negative but it doesn’t have to be. Risk can be both an opportunity and a threat. It all depends on how you view it. This is why risk-seekers minimize threats by saying it’s nothing to worry about and are optimistic about opportunities “that are too good to miss”. Meanwhile, risk-averse individuals are likely to assess the same situation in a totally different way. Their guiding principles are: “better safe than sorry.”


Here’s how Hillson’s process, to maximize positive events and minimize


20 British Columbia Berry Grower • Spring 2011


3. Qualitative risk assessment. Of all the potential risks you’ve identified, which ones matter most? By identifying which are the most important, you are able to assess and prioritize which ones are more critical to the success of your operation.


Dr. David Hillson


negative threats, works: 1. Set objectives. The first step of the risk management process is clearly answering questions such as: What am I trying to do? What are my objectives and goals? Where am I headed, what do I want to happen?


Hillson says clarifying your


investment strategy, your rate of return, your marketing position, and figuring out what kind of product you want to produce should be your priority. These are the things that are at risk, that matter, and that can affect your objectives.


2. Identify risk. The second question is what could affect me in achieving those objectives? What are the uncertainties that could affect me in a good or adverse way, that can help, or hinder?


4. Quantitative risk analysis. By using a computer-based model of your business situation and adding the elements of risk you’ve identified, it’s possible to come up with a range of different outcomes reflecting the overall effect of risk on your business. 5. Risk response planning. Once you have identified which risks are the most important, you can tackle the fifth question which is: What am I going to do about it? Risk response planning is about selecting appropriate response strategies in order to minimize and avoid threats while maximizing and exploiting opportunities. 6. Implementation. The implementation stage is about taking the planned actions and monitoring their effectiveness. 7. Review. Risk management is cyclical process. It must be adjusted as the business faces new risks and as the environment or family situation evolves. It is also a “work in progress”. Take the time to ask yourself questions such as: • What’s changed? What have I learned from doing what I said I would do?


• Did the bad risks go away and the good risks happen, or not?


• What will I do differently next time? Thinking about these answers will give you the opportunity to refine and improve your risk management effectiveness.


MCHALE WRAPPERS: DEUTZKUHN: Welger Balers


PHONE: 604.826.3281 FAX: 604.826.0705 Dave Kruk


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