Risk management can be approached in two distinct ways: by using numbers (quantitative) or by using words (qualitative), says Jeff Millang, livestock economist with Alberta Agriculture and Rural Development, Olds. The “numbers” method of measuring and managing risk is both common and well understood. Examples of quantitative risk management tools that Alberta Agriculture has available are CropChoices and FIR$T.
“However, when you don’t have numbers, or when risks don’t lend themselves to a quantitative approach, a new easy-to-use risk matrix tool called RiskChoices can help identify, measure and manage risk by using “words.”
RiskChoices consists of an instruction folder, and a series of worksheets and charts that guide the user through its various steps. RiskChoices is Alberta Agriculture’s first qualitative risk management tool. The new version allows the examination of the positive side of risk.
Risk has two dimensions – probability and impact. Probability is the likelihood that a risk event will happen. RiskChoices uses words such as very high, medium or very low to describe probability. Impact is the magnitude of the consequences that would occur if the event took place. Again, RiskChoices uses words instead of numbers.
While this type of process (using words) is new to most agri-businesses, it is used extensively in larger scale businesses and project management applications. It is also used as part of larger risk management programs such as Enterprise Risk Management.
There are several strengths of the RiskChoices approach are several:
it is very adaptable, and can be used whenever there is a need to identify, measure and manage risk
it uses words and ideas instead of numbers
it simplifies risks by separating each risk into two components: probability and impact
it generates meaningful and structured discussion about managing risk and, at the same time, provides a simple but organized method of keeping track of the strategies created
To obtain a copy of RiskChoices, contact Jeff Millang at 403-556-4326, Bruce Viney at 403-556-4250 or Mark Muchka at 403-948-8504. For a web-based version of this program, visit Alberta Agriculture’s website at www.agriculture.alberta.ca/riskchoices.