Risk is inherent in every investment. Timberland investment risks include environmental restrictions, possible damage from biological causes and natural catastrophic events, and cyclical market conditions. RMK Timberland Group actively seeks to manage these risks through proven forest management and portfolio strategies.

Risk management begins with a detailed acquisitions discipline. Tracts of timberland considered for purchase are assessed by on-site inspections to ensure the health of the timber stand and its growth prospects. Potential environmental restrictions also are carefully analyzed as part of the acquisition process. While stricter timber harvesting guidelines constrain supply, they also tend to escalate timber values.

In a properly managed forest, the risk from natural causes such as fire, insects and disease is low. Selective thinning, the use of fire breaks, and planting of genetically improved seedlings help to minimize risks. Diversifying geographically and excluding certain coastal areas also reduce the risk of losses from catastrophic events. Through advanced forestry management practices such as these, RMK Timberland Group limits damage from natural causes.

Timberland investments benefit significantly from biological growth. Constant tree growth reduces the impact of cyclical timber price declines and magnifies timber price increases. For example, if a tree grows 8 percent in one year and timber prices increase 8 percent, the net value will increase 16.6 percent. If timber prices decline 8 percent, the net decline is only 0.6 percent because of the offsetting effect of the tree growth.