F UT UR E F O CUS
•••
JENNY MATHEWS
MOVING THROUGH RISK
TOWARDS RESILIENCE
BUSINESS IS ALWAYS A
GAMBLE. IT INVOLVES
A LOT OF GUESSWORK.
THERE ARE FEW CER
TAINTIES AND MANY
POSSIBILITIES. NO ONE
KNOWS WHAT IS GOING
TO HAPPEN AN HOUR
FROM NOW. THE BEST
YOU CAN DO IS MAKE
ASSUMPTIONS BASED
ON WHAT IS ALREADY
GOING ON … AND THEN
YOU HAVE TO GO WITH
YOUR GUT! – TONY MAN
NING, BUSINESS CON
SULTANT
O
nce again my kitchen scale
stands centre stage on the
counter. My khaki-clad men are
peering at the result. Of course
… its crop estimates time! My
husband had taken one look at
the cob and announced it weighed
220g. Both sons carefully strip
the kernels off the cob, weigh
them and are amazed, “How did
you guess Dad?” He smiles, “I’ve
been doing this for many years!”
I used to wonder what the point
of the exercise was, but I’ve also
been in this business “for many
years now”. And I have learned to
respect the process. The adage is
true: Knowledge is power. Much
decision-making needs to be done
before one crop is taken off the
lands and budgeting, planning and
purchasing is done for the next
season.
Donald Rumsfeld, past US
Secretary of Defence, once said
there are known-knowns - things
we know we know; known-unknowns - things we know we don’t
know, unknown-knowns - things
we don’t know that we know, and
unknown-unknowns - things we
don’t know we don’t know! This is
a wonderfully succinct way of describing the relationship between
knowledge and probable outcomes
and is also a good description of
what farmers need to manage
every year.
Risk is about dealing with
knowns, and unknowns. Actually,
this is something which humans
have dealt with ‘since forever’.
Even early man out hunting a
mammoth beast essential for the
survival of his clan, faced risk as
he planned and executed his hunt.
Risk is comprised of two key elements: exposure and uncertainty.
If there is one but not the other,
there is no risk. Exposure implies
you have something ‘on the line’
and a reason to care. Uncertainty
explains itself – there are always
unknowns in farming! Increasingly
risk management has come to play
a role in farming so the farmer can
add yet another title to his package
of required skill-sets: Risk Mana
ger. In many ways this is essentially
what my men are doing when
they weigh the cobs. It’s not just
about the weight of the cob,
it’s about the calculations done
to estimate the return they can
anticipate off the land, and those
decisions that are waiting to be
made.
Risk management is not a
once-off process; it evolves as the
environment ‘out there’ changes
to respond to different stressors.
Neither is it a one-size-fits-all action - every operation is unique.
Risk management means you are
looking at potential threats and
choosing from a number of possibilities and options to reduce
the risk on the farm. Including
risk analysis into your business
management is a strategy for
improving the resilience of your
business. It is also an act of hope
and a statement of belief in
the future of your operation. It
shows you are prepared to tackle
the problems and think strategically. Barack Obama said, “I
have always believed that hope is
the stubborn thing inside us that
insists, despite all evidence to the
contrary, that something better
awaits us so long as we have the
courage to keep reaching, to keep
working, to keep fighting.”
If you studied risk management, it is likely you have heard
that the 4 key components of
risk are the 4 T’s: Tolerate; Treat;
Transfer and Terminate.
• Tolerate – An important
decision-making part of risk
analysis is selecting which
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