RightRisk
A Panel Discussion
National Risk Management Education Conference
Kansas City, MI
2005 April 7-8
Panel Discussion
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Panelists
Overview
Genesis
Statistics
Multi-state cooperation
Complimenting other programs
How to have RightRisk in your state
Panel Members
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Jeffrey E. Tranel, Colorado State University
Rod Sharp, Colorado State University
John Deering, Colorado State University
John Hewlett, University of Wyoming
Trent Teegerstrom, University of Arizona
Jay Parsons, CSU & RightRisk Coordinator
In The Beginning
Limited number of risk simulations
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For research
“Game”
• Developed by Ikerd
• Used by Hoag in 1995
– Graduate level course in production economics
Need of risk management education for
Extension audiences
In The Beginning
Risk and management of risk
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Permeates all aspects of today’s agriculture.
Identified in1996 Farm Bill.
Producers are exploring new ideas.
How to teach producers and lenders about risk
management?
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Non-academic
Realistic
Experiential learning
Fun
Farm Survivor
Void
Farm
Survivor
Farm Survivor
Developed by Colorado
extension economists
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Participants to manage farm
operation
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Dryland cropping
Cattle
Hunting rights
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Four quarters & two years
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Risks faced by producers
over production cycle
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Production
Marketing
Human
Farm Survivor
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Played by teams
One presenter
One facilitator per team
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Recorded team decisions and outcomes
Answered questions by team members
Labor intensive
Farm Survivor
Presented to ag lenders
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After lunch
Learned about risks faced by producers
Learned about risk management strategies
Enjoyed learning experience
Farm Survivor
Exploring new tactics
– To reduce labor needs
– To computerize
– To improve presentation
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Timing
Group size
Materials
Other
Void
Farm
Survivor
Ranch
Survivor
Ranch Survivor
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Received grant (CSU & UW).
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Improve game
Computerize game
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Reduced labor needs
Easier development of new versions and scenarios
Website
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General access to risk management education materials
Play game (after participating in workshop)
Private site
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Share resources
Develop new ideas
Development of complete educational program
Ranch Survivor
Developed in 2001
– Western Risk Management Education Team
Mountain ranch setting
– Hay (350 acres)
– Cow-calf (500 cows)
Decisions
1. Forward price calves?
2. Buy or sell hay?
3. Vaccinate cows?
4. Retain ownership?
Decisions
Risks
* Production
** Weather
** Disease
* Market
** Shifts in demand
** Corn crop situation
Decision
Risk
Outcomes
Decisions
Risks
Outcomes
Evaluation
Ranch Survivor Investment Rules:
Investment
Each team member may invest $X ($1-$5) into a pot.
An additional $Y is added to sweeten the pot.
If a team member is uncomfortable making the investment,
an outside investor will be found)
“Winning”
– Team members with expected or greater outcome
get money back.
– Team members with negative net incomes
required to add an additional $1 to the pot.
– Team with the highest net income
wins the remaining pot.
Ranch Survivor
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Presented to:
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Ag lenders
Producers
Extension agents
Western Extension Committees
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Farm Management
Marketing
Void
Farm
Survivor
Ranch
Survivor
RightRisk
RightRisk
• An innovative risk research and education
program to help you the farmer or rancher
understand and explore risk management
decisions and evaluate the effects of those
decisions.
RightRisk
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An innovative risk research and education program to help you the farmer or rancher understand
and explore risk management decisions and evaluate the effects of those decisions.
• Does not make decisions for the participant.
Using RightRisk, people explore risk
management strategies, build decision-making
skills, and learn about personal risk
management styles.
RightRisk
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An innovative risk research and education program to help you the farmer or rancher understand
and explore risk management decisions and evaluate the effects of those decisions.
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Does not make decisions for the participant. Using RightRisk, people explore risk management
strategies, build decision-making skills, and learn about personal risk management styles.
• Uses real world farm/ranch settings and
agricultural economics. Allows many kinds of risk
and risk management strategies and lets you
compare one strategy against another. You use
real probabilities and you see the results. With
RightRisk, you can run a model as many times
as you like to determine if you are doing well or
poorly because of luck or bad strategy.
RightRisk
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An innovative risk research and education program to help you the farmer or rancher understand
and explore risk management decisions and evaluate the effects of those decisions.
•
Does not make decisions for the participant. Using RightRisk, people explore risk management
strategies, build decision-making skills, and learn about personal risk management styles.
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Uses real world farm/ranch settings and agricultural economics. Allows many kinds of risk and risk
management strategies and lets you compare one strategy against another. You use real
probabilities and you see the results. With RightRisk, you can run a model as many times as you
like to determine if you are doing well or poorly because of luck or bad strategy.
• In the end, the knowledge and practice you gain
through RightRisk will help you make better
decisions for your farming/ranching operation.
Simulation Game
RightRisk
Provides an opportunity to practice
risk management without the real
world consequences
RightRisk Education Coalition
Develops and delivers
innovative and effective
risk management education programs
for agriculture
across the western U.S.
RightRisk Education Coalition
• Grants (WC-RME, CSREES, NRI, WSARE)
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Website
Travel for meetings
Travel for program delivery
Program development
Support materials
Coordinator
New versions and scenarios
• Existing network of co-workers
• Build on other regional products:
– “Risk and Resilience”
– “Managing for Today’s Cattle Market and Beyond”
– Western Risk Management library
RightRisk Education Team
Jay Jenkins
Duane Griffith
Wilson Gray
Chris Bastian
John Hewlett
John Deering
Dana Hoag
Dennis Kaan
Rod Sharp
Jeff Tranel
Jay Parsons,
Coordinator
Western Extension Committee
Farm Management and Marketing Committees
Established professional relationships
– Regular interaction
– Previous experience working together
– Incentives
Personal relationships
– Committee members
– Family members
RightRisk Development and
Use in Risk Management Education
Working Scenarios
• The King Family Ranch
• The Wheatfields
• Public Lands
Working Scenarios
• The King Family Ranch
– A cow/calf/hay operation in the mountains of
Colorado.
– Scenario focus: livestock marketing.
Working Scenarios
• The King Family Ranch
• The Wheatfields
– A wheat/fallow dryland farming operation on
the eastern plains of Colorado.
– Scenario focus: grain marketing and crop
insurance.
Working Scenarios
• The King Family Ranch
• The Wheatfields
• Public Lands
– A cow/calf/hay operation near the
Arizona/Utah border.
– Scenario focus: grazing management.
Working Scenarios
• The King Family Ranch*
• The Wheatfields*
• Public Lands
*Available on our website: http://www.RightRisk.org
The Sheep Ranch
The Sheep Ranch is located in the mountains of Colorado. They run 1500 head
of ewes on a combination of public and private land. They typically lamb in
April and sell the weaned lambs in October of each year.
Scenarios in Development
• More Public Lands
• Double R Ranch
• Bar-B-Q Ranch
• Eight-year drought scenario
• Wheat marketing plan scenario
RightRisk Workshop Offerings
• December 2002
• Western Alfalfa & Forage Conference in Sparks, NV.
• 2003
• 37 workshops across 9 states
• 2004
• 57 workshops across 8 states
• 2005
• 10 workshops across 5 states (January & February only)
Over 100 workshops across 11 states
RightRisk Workshop Evaluations
Which one of the following best describes your professional interest in this workshop?
50%
45%
44%
40%
Percentage of Responses
35%
30%
25%
20%
15%
15%
10%
10%
7%
7%
5%
8%
9%
0%
Producer
Extension
Educator
Ag Lender
Student
Government
Agency
Other
No Answer
Question 2: How critical do you consider the issue of risk management in today's agricultural
operations?
All Respondents
Producers Only
60%
Averages
All: 6.16
Producers: 6.23
50%
50%
40%
43%
30%
31%
29%
20%
18%
16%
10%
3% 4%
1% 1%
0% 0%
0% 0%
4% 0%
4
3
2
1
Not Critical
No Answer
0%
7
Very Critical
6
5
Question 3: Overall, how helpful do you think this RightRisk workshop has been?
All Respondents
Producers only
45%
Averages
All: 5.97
Producers: 6.04
42%
40%
38%
35%
30%
36%
32%
25%
20%
21%
20%
15%
10%
5%
5% 5%
1% 0%
0% 0%
0% 0%
0% 0%
3
2
1
Not Helpful
No Answer
0%
7
Very Helpful
6
5
4
Question 4: How much do you think RightRisk can help you learn about your personal risk
preference levels?
All Respondents
Producers only
45%
Averages
All: 5.74
Producers: 5.73
40%
39%
35%
34%
33%
30%
27%
25%
24% 24%
20%
15%
10%
7% 7%
5%
2% 1%
1% 0%
0% 0%
0% 1%
3
2
1
Not At All
No Answer
0%
7
Greatly
6
5
4
Question 5: How much do you think RightRisk can help you learn about managing risk?
All Respondents
Producers only
45%
Averages
All: 5.79
Producers: 5.87
40%
40%
37%
35%
30%
30%
27% 26%
25%
25%
20%
15%
10%
7%
5%
5%
0% 1%
1% 1%
0% 0%
0% 0%
3
2
1
Not At All
No Answer
0%
7
A Great Deal
6
5
4
Question 6: How likely are you to use RightRisk on the internet?
All Respondents w/ internet access
Producers w/ internet access
35%
Averages
All: 5.28
Producers: 5.36
30%
29%
28%
25%
25%
24%
20%
20% 20%
17%
15%
13%
10%
6%
5%
5%
4%
3%
4%
2%
0% 0%
0%
7
Likely
6
5
4
3
2
1
Unlikely
No Answer
RightRisk Website
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Website address: www.rightrisk.org
Access web versions RightRisk scenarios
Access RightRisk publications
View a schedule of RightRisk program
offerings throughout the U.S.
• Access a library of links to numerous online risk educational resources.
RightRisk Website Statistics
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5,000 documented user sessions
105,700 hits
Users represent 13 countries
35 U.S. states and 4 Canadian provinces
are represented in the user statistics.
How Does RightRisk Enhance the
Effectiveness of Teaching
Educational Programs?
Advantages of using RightRisk in an
Educational Program
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Hands-on activity
Everyone is involved making decisions
Competing with other teams (game)
Real farm/ranch settings
Real probabilities
Quick results (computerized simulation)
IT’S FUN
RightRisk
Works in a Variety of Settings
• Ag Production Meetings
– Focus on production risks
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Weather/Drought
Disease
Insects
Weeds
– And production tools
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Insurance
Diversity
Fertilization
Disease Prevention (Vaccination)
RightRisk
Works in a Variety of Settings
• Marketing meetings
– Focus on market risks
• Price variations
• Cyclical patterns
• Price trends
– And marketing tools
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Forward pricing
Retained ownership
Futures and options
Marketing plans
RightRisk
Works in a Variety of Settings
• Financial Management Meetings
– Focus on financial risks
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Insufficient cash flow
Declining asset values
Foreclosure / Bankruptcy
Interest rates
– And Financial management tools
• Enterprise budgets
• Financial statements
• Financial analysis
RightRisk
Works in a Variety of Settings
• Classrooms
– High School vo-ag classes
– University classes
– Community college classes
RightRisk
Works in a Variety of Settings
• Examples
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Agriculture lender meetings
Crop insurance trainings
Risk management workshops
Drought workshops
Futures/Options trainings
Commodity group annual meetings
Extension agent in-service trainings
Professional development for extension specialists
Regional production symposium
And for a variety of different audiences.
• Examples
– Extension agents
– Farm management specialists
– Marketing specialists
– Ag lenders
– Livestock producers
– Crop producers
– High School students
– College students
Important Features of RightRisk
• Spreadsheet Version-Group presentations
• Internet Version-Continuing education following
on-site presentation
• Lesson Guides
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Risk Management Techniques
Insurance
Financial Risk Management
Price Risk Management
Safety First
Important Features continued..
• Scenarios-To match different production
situations
– The Wheatfields Scenario
– King Family Ranch Scenario
– Public Lands Scenario
– Sheep Scenario
– Drought Scenario
Important Features continued..
• Building Basic Skills
– Overview of risk and risk management
– Measuring risk tolerance
– Strategic planning/Making decisions
– Risk mapping
– Probabilities
How to Get Involved
Host a RightRisk program
– Details on hosting a program may be found at
RightRisk.org
Participate in offering a RightRisk program
– See program schedule at RightRisk.org
Questions? contact a RightRisk Team member
– See member list at RightRisk.org