Most of these business risks have straight-forward explanations. However, human risk is commonly underemphasized. Human risk relates to selecting and maintaining high quality labor, management and board of directors. The people who are involved with the co-op are the ones who make it successful. The second category is financial risk.
Financial risk is the increase in business risk caused by debt financing.
These include the availability of borrowed capital, credit terms, and changing interest rates. Financial risk may not seem as large as business risk, but the ability to adjust to business risk by using borrowed capital can have a great impact on the co-op's ability to succeed. Both business and financial risks should be incorporated into the selection of an appropriate discount rate, and be included in your co-op membership decision. In most cases, the responsibility for profitably marketing the commodity is turned over to the co-op though its processing activities. It is important to understand how and when you will be paid for the commodity you deliver.