Risk Exposure Assessment

Risks needs to be assessed and understood in the context of the individual enterprise you are planning (e.g. developing a value-added product), the whole farm, the owner’s personal finances and participants upstream or downstream from you in the value chain.  The risks and investment associated with a new venture may be acceptable and manageable on an enterprise level, but may be too high or unmanageable if:

• The farm itself is experiencing cash flow or debt issues
• The farm owners have significant personal financial obligations (e.g. student loan payment) or are looking to transition to another phase (retirement or farm succession)
• Farm spouses have different plans and acceptable risk levels
• There are supply challenges (supplier has regular weather or delivery issues) or demand challenges (large customer may abruptly cancel orders due to a food safety or public health issue)

Opportunities are not opportunities for everyone.

Risks may be manageable for one farm and not for another.  One weak link can make the whole operation vulnerable, no matter the strength of the rest of the chain. Staying in control and take the time to understand your situation.  Understanding your exposure can help you proactively manage risks and identify when you have too many eggs in one basket.

Next page