Step 3: Establish Risk Goals

by John P. Hewlett, University of Wyoming

Why bother with setting goals? The old adage says it best, “If you don’t know where you’re going, any road will get you there.” Having clear, well-defined goals can help focus energy and effort. While this may not guarantee success, it does make it more likely. Doing the right things right is the key to getting to where you want to go.

The strategic risk-management process, or SRMP, describes a method of managing the farm or ranch operation as a whole, rather than as separate, unrelated parts. It provides a step-by-step method for working within the framework of information overload and multitude of risks ag managers face on a daily basis.

The process begins by determining your financial health and risk tolerance, then with setting goals for the operation. The first step in goal setting is to determine who is on the management team. Is it mom, dad, daughter, and her husband? Perhaps it’s a mixture of parents, uncles, brothers, sisters, and spouses all joined together in a corporation. It may be just an operator and their spouse. Once it is learned who is on the team, everyone should be involved in the goal-setting process. Remember if the members of the team do not have ownership of the goals, they probably won’t be working hard to help reach them.

Mission Statement

The second step is to visualize where the operation should be. Form a picture of what the future should look like. Some experts claim that we can program our minds to help bring about the things we really want to achieve.

The operation may want to capture this vision in a mission statement: a list of all the things the operation wants to be and do. A mission statement is a description of the purpose of the operation. It should describe what the management team sees the operation becoming for the individuals, the family, and for the team. A mission statement should specify what the operation will focus on in the long run. Written mission statements help build strategic goals that work for the operation.

Strategic Goals

With a mission statement in hand, the next step of drafting strategic goals can begin. These might best be viewed as a roadmap to follow to reach the destination set for the operation. Strategic goals are long term goals. They are specific steps for reaching the general goal(s) described in the mission statement. Strategic goals are typically written for 10-20 years in the future.

Where the mission statement is the destination, strategic goals form the roadmap. They are supported by the mission statement and are nurtured by the principles it contains. They represent the specific steps the operation must accomplish to reach its final objective. To do this, strategic goals must be prioritized. Resources available to most operations are limited. Thus, not all goals can be reached at the same time. Prioritizing the goals is a way of making sure the most important things are done first.

Tactical Objectives

Tactical objectives provide the framework for achieving the strategic goals. They identify a sequence of events or accomplishments required on the way to reaching longer term strategic goals. Tactical objectives generally describe “how” the strategic goals will be achieved and the order in which those events need to occur. They help to outline what needs to be accomplished in the near term, as well as into the future, usually the period three-10 years from today.

Operational Plans

Operational plans are concerned with describing the specific steps and timetable required for accomplishing the tactical objectives. Operational planning deals with the “how” and “when” of the process. This step refers to planning the activities that must be accomplished in order to achieve the tactical objectives and the timing of these activities over the coming year. Operational plans often include a listing of the action steps, a timeline for completion, who is responsible for completion of each step, and some indicator to show the step has been completed.