The process of risk measurement aims to quantify and measure risk over and above that which is expected i.e. it focuses on unexpected/catastrophic loss rather than expected/average loss. Risk management cannot eliminate risk but aims to take action to reduce the likelihood of risks occurring and to reduce the impact when they do.
This report looks at what lessons the Scottish forestry sector can learn from risk measurement and management approaches used in the financial sector.
We discuss a number of financial risk measurement and management approaches suitable to Scottish forestry, and consider how the approaches taken to measure and monitor risk, and the experiences of the finance sector – particularly during the recent financial crises – provide many lessons for the forestry sector as it seeks to adapt to the challenges of climate change.
Whilst many of the approaches outlined in this document are about reducing financial loss to the sector to ensure sector activities are preserved and supported, there are some lessons for wider preparatory approaches, and financial security itself will be an important factor in the resilience of the sector.