Risk Management Research Paper
Risk management is a process of identifying, assessing and putting into consideration of all possible risks before they occur and coming up with procedures that will prevent the risk, or reduce its consequences on the whole project (Agrawal, 2009).
I was once involved with an agricultural project of growing organic vegetables for sale on my parents` farm. The process entails a lot of work and calls for patience.
During this period I came across several risks and challenges that included;
- Production risks
- Marketing/price risks
- Financial risks
- Environmental risks
- Management risks
Production risk is whereby you do notget the expected output due to weather changes or damages caused by pests. In one of the seasons, we received low rainfall. Low rains are a challenge every farmer anticipates. Fortunately, there is a borehole in the farm so the option was to use irrigation to water the vegetables. The problem was solved and the production was not affected very much though reduced the amount of the output I expected (Risk management, 1999).
Marketing risk is a possibility of losing market of a product or its prices going down than expected due to overflow of the product in the market. Vegetables are very perishable. However, their demand is always high throughout the year. The option to keep the vegetables available to the market is to have high preservative means, which is an added cost. This is a risk which occurred to me once, later I joined a marketing cooperative where the mangoes were packed in cartons before they got ready for use (Agrawal, 2009).I decided to market my produce on social media which is an effective marketing platform as it would allow me to meet a wide range of potential buyers.
Financial risk occurs in times when one has insufficient funds to meet the required obligations or due to low profits than expected. Financial risk comes as a result of production and marketing risks as discussed earlier. Machinery and equipment for irrigation could have brought a financial risk ifI opted to purchase; however, I hired them, which was cheaper (Agrawal, 2009).
Environmental risks involve the surroundings from the neighbors, water quality and pesticide handling. I was challenged once when accidentally an employee used a lot of pesticide on the plants. It really affected the trees some even dried up and affected the soil fertility. Ialso had to add some manure to boost the fertility (American Society of Insurance Management & Risk and Insurance Management Society, 1969).
Considering this is a family property, family members are always easily available in terms of labor. Some of them are so ignorant when it comes to work. This gave me difficult time but at the end of it, I had to try alternative source of labor. This helped me have a good control of the whole project (Agrawal, 2009).
In conclusion, if risk management was not used like for example instead of hiring machinery and equipment for irrigation, I could have avoided future expenses of hiring by just buying them, which could also be an asset. Having used risk management in place it, helped in several ways. First, it helped me get fair prices of my goods at all times and secondly, it helped me make wise decisions of running the farm in terms of labor, production and marketing (Risk management, 1999).
American Society of Insurance Management.,& Risk and Insurance Management Society. (1969). Risk management. New York, N.Y: American Society of Insurance Management.
Agrawal, R. C. (2009). Risk management.Jaipur, India: ABD Publishers.
Risk management. (1999). Leicester, UK: Perpetuity Press.