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Economic Variability and Risk Management

In this section you can list the risk factors the business faces, both inside and outside of the business, and the tools and strategies used to reduce risk.  Use the points below to help you prepare this section.

1. External Risk Factors

  • Input and output price volatility. 
  • Shortages of production inputs and raw materials 
  • Price cutting by competitors 
  • Unfavorable industry trends 
  • Unfavorable legislation 
  • Unavailability of trained labor 
  • Other factors
2. Internal Weaknesses and Risk Factors
  • Construction delays and/or cost over-runs
  • Plant specifications not met 
  • Production capacity goals not met
  • Inferior management 
  • Sales projections not achieved. 
  • Difficulties in obtaining credit 
  • Other factors

3. Risk Assessment Tools

  • Sensitivity analysis 
  • What-if analysis 
4. Risk Management Tools and Strategies
  • Hedging and options 
  • Input and output contracts 
  • Construction contracts 
  • Performance contracts 
  • Insurance
  • Contingency plans 
  • Other tools and strategies
More information is available on Risk Management.

More information is available on Grain Price Risk Management.

More information is available on Livestock Price Risk Management.

More information is available on Insurance.

 

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The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, gender, religion, age, disability, political beliefs, sexual orientation, and marital or family status. (Not all prohibited bases apply to all programs.) Many materials can be made available in alternative formats for ADA clients. To file a complaint of discrimination, write USDA, Office of Civil Rights, Room 326-W, Whitten Building, 14th and Independence Avenue, SW, Washington, DC 20250-9410 or call 202-720-5964.
 

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