Production risk is the uncertainty of any production related activity or event affecting quality and quantity of crop or livestock commodities. 

Production risks may include: pests, diseases, technology, genetics, machinery efficiency, quality of inputs, weather, rainfall, fire, wind, theft, etc.

Strategies for managing production risks may include:

• Control or minimize risk through management practices by doing a better job of what you already do, such as timeliness of application, use of irrigation systems, health and nutrition programs, preventative maintenance, etc. 
• Reduce production variability by making changes such as diversifying, integrating, applying new technology practices, etc. 
• Transfer production risk to someone else through contracting, purchase of insurance products (property and casualty, health, life, and disability, liability), etc. 

Financial risk is any risk that threatens the financial health and stability of the farm. 

Financial risks may include:

• Cost and availability of debt (financing) capital;
• Ability to meet cash flow needs and commitments in a timely manner; 
• Ability to absorb short-term financial shocks;
• Ability to maintain and grow the equity in the business. 

Strategies for managing financial risks may include:

• Collect and organize financial records;
• Analyze financial position and  performance utilizing financial statements;
• Plan and create future budgets.  
   

Legal risk is the uncertainties surrounding agreements between individuals, between individuals and groups, or between groups. 

Legal risks may include:

• Contractual agreements, such as farmland or crop share leases and crop insurance coverage;
• Business structures, such as sole proprietorship, partnership, LLC,  corporation, or trusts;
• Laws and regulations, such as tax laws, pesticide use regulations, conservation easements, and land use restrictions;
• Tort liability, such as injury on farm property, and employment issues.

Strategies for managing legal risks may include:

• Written forms of contractual agreements;
• Formation of appropriate business organization;
• Increased knowledge of laws and regulations.
   

Human risk is risks associated with people involved in the farm business. 

Human risks may include: 

• Human health and well-being, such as the health and safety of family and employees;
• Family and business relationships, including stress management and communication;
• Employee management, such as hiring and retaining employees;
• Transition planning, including transfer of assets and management responsibilities.

Strategies for managing human risks may include:

• Have on hand and provide training to employees on the use of protective equipment;
• Develop contingency plans and management systems and procedures; 
• Consult with agricultural professionals for resources and advice. 
   

Price or market risk is the uncertainty associated with changes in the price of output or of inputs that may occur after the commitment to production has begun. 

Price or market risks may include:

• Changes in the prices farmers will receive for commodities; 
• Changes in the prices farmers will pay for inputs;
• Availability or access to markets for sale of commodities. 
• Commodity export demand, world stock levels, or other global factors.