November 6, 2009 01:11 AM

Update Your Risk Rankings

The financial meltdown and resulting recession are said to have exposed the problem of disguised risks. Investment bankers made fortunes by remixing risky instruments, such as sub-prime mortgages, into products that appeared solid. It was simply well-paid sleight of hand, we now discover.

There are other risks we can't accurately gauge. That's always been true, but I think much of our information flow currently seeks to misdirect our attention from real threats.

The most dangerous risks to our operations often are more personal. It may be wise to identify and rank them. Listed in order of "severity multiplied by probability," we have a priority for worrying. Here is how I plan to avoid or mitigate these more insidious hazards.

1. Peace of Mind. The odds of mental illness are as high as 50-50, according to Danger Ahead: The Risks You Really Face on Life's Highway, by Larry Laudan. Not even heart disease can match it. Include couple depression and/or anxiety costs with that probability, and suddenly taking steps to avoid this threat is the single best thing I can do for my future. Your farm will not function well with an impaired decision maker.

Remedies are proven and well known: Have friends by being a friend. Control your drinking. Exercise (other than work). Forgive persistently. Be careful what you read and watch. Tell your doctor the truth, and then follow the advice. Outsource some stressful tasks. Take peace of mind seriously.

2. Address Family Matters—Now. Divorce often ends farm operations. Children with behavior problems occupy enormous amounts of time. Disagreements between siblings and generations skew operational judgments. Even planting can wait until family members decide how and when to address these issues.

3. Health and Safety First. As a rule, farmers don't have multiple layers of personnel backup to survive a loss of anyone—even for a brief time span. In short, you are the one machine that has to be maintained scrupulously, or the competition will overtake you rapidly. Operating lean means no room for error. Make safety the easy (or only) choice. Cross-train everyone as much as possible.

4. Love Your Landlords. Explore everything you can do to deepen your relationship with your landowners. To manage that task, evaluate which farms are the most valuable, weighing productivity, profit, location, and future ownership possibilities. Then devote your efforts accordingly, despite any personality problems that might be involved. Solve landowner problems first, not yours.

5. Experiment. Minds under stress revert to old patterns of action. Find some ways to constantly experiment or at least talk about possible new tactics.

6. Remain Objective. Not only will many of us miss the forest for the trees, some will also be busy with leaf collection. After times of great change, most look back and wonder how they missed obvious opportunities and dangers. Enlist unbiased eyes and brains. Compare against other industries. Watch competitors globally.

7. Adjust Time Frames. If some of your personal deadlines are looking harder to achieve, rethink them. Progress goals should be written in pencil on a long-term calendar. Maybe waiting five years longer to pay off all your debt isn't the end of the world. Maybe not paying it off is a good estate-planning tool. If you haven't expanded from 2,000 to 5,000 acres in five years, will you really only be 40% as happy?

We too frequently apply the term risk only to market prices or weather. Tools exist to manage those threats. The risks that end many careers and truly impact our well-being are left to individuals to mitigate. Simply acknowledging them is a good first step.

John Phipps is a sixth-generation farmer from Chrisman, Ill. He is the TV host of "U.S. Farm Report." Contact John at For local station listings, log on to

Top Producer, November 2009

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