A stochastic streamflow model is used to develop a risk methodology for operation of reservoirs. The model is based upon representation of the flood series as a Poisson counting process. From this model, probability distributions of maximum peak flows, durations, and interarrival times can be obtained. With these distributions known, the flood volumes can be obtained using a triangular hydrograph approximation. Using the derived distribution functions, risk evaluation curves are developed which aid the reservoir operator in making important real time decisions. The procedure can also be used to evaluate the efficiency of alternative design strategies.