Operation of water resource systems requires estimates of drought risk so that water storage and allocation decisions can be made to mitigate drought-related impacts. Because droughts result from hydroclimatic system forcings, the estimation of drought risk is complicated by the nonlinear evolution of the hydroclimatic system after the forcing. Small changes in atmospheric-hydrologic-oceanic conditions at the time of the forcing can lead to significantly different hydrologic system responses. The observed record of streamflow and precipitation include only a small number of drought-forcing mechanisms limiting the information that can be gained through time-series analysis methods. Utilizing the ability of climate models to reproduce the salient features of the hydroclimatic system associated with drought evolution, a large number of realizations can be generated to examine the range of hydrologic system responses that result from a hydroclimatic system drought-forcing mechanism. Conditional drought risks can then be derived from the simulation results which can then be incorporated into water-resources planning methodologies allowing drought-mitigation strategies to be employed. The methodology for deriving and using drought risks from ensemble climate simulation results including the effect of the number of realizations upon the results will be presented