Despite the significant role of smallholder farms in Ethiopian agriculture, there is a need for robust methods to assess and mitigate risks faced by these farmers. Panel data estimation techniques were employed to analyse the impact of various risk factors on smallholder farm performance, focusing on Ethiopia’s agricultural sector. A preliminary analysis indicated that climate variability significantly impacted crop yields by an average reduction of 20% in some regions. The study concludes with a robust methodological framework for future risk assessment and mitigation strategies tailored to smallholder farming systems in Ethiopia. Recommendations include the integration of insurance schemes and weather forecasting services into agricultural development programmes to enhance resilience. Smallholder farms, Risk reduction, Panel data analysis, Climate variability, Agriculture, Ethiopia The empirical specification follows $Y=\beta_0+\beta^\top X+\varepsilon$, and inference is reported with uncertainty-aware statistical criteria.