Veteran Advisor
Posts: 1,563
Registered: ‎10-18-2016

Strategic Risk

The University of Illinois talks about risk.  There is Operational Risk and Strategic Risk.  They say Operational Risk includes Business Risk (price, cost, production issues) and Financial Risk, which has to do with how the farm debt is structured.  We are all familiar with and deal with these risks every day.

Strategic Risk, they say, has to do with the overall economic climate and how the farm is positioned.  Is it sustainable?  Is it producing items needed (no buggy whips).


I guess to me the strategic decisions are like getting out of hogs or switching from grain to fish ponds, or something like that.  Strategic decisions seem to me to be pretty big deals.


I wonder if we have the wherewithal to assess strategic risk like the academicians do?  Hogs go to $8 and the wife, the banker or the son says no more hogs and that is that.  A farmer is 72, can't outrun a mother cow anymore and gets booted over a fence.  There go the  cows.  Yes, I know that there are a lot of things that go behind the "strategic" decisions, but I wonder if it isn't more a lot of things that just kind of make the decision for us.