Risk perception, attitudes towards risk and risk management: evidence and implications

Abstract

Abstract:Th e comprehensive risk analysis of a business such as farming entails questions on what is at stake, how important is the risk concern and how to deal with it. We performed a sequential mixed method, with the in-depth interviews in the fi rst stage (n = 35), followed by a survey on the Flemish FADN (n = 614) in the second, to investigate the farmers' risk perception, the attitudes towards risk and the perceived usefulness of the risk management strategies. We fi nd that, rather than the short-term volatility in prices, the longer term co-evolution of expenses versus receipts is of a major concern to farmers, next to the land availability and the policy risks. Farmers are shown to be only slightly risk averse, rather risk neutral even. Further, our results suggest that farmers do not consider extensively studied risk management strategies such as contracts, futures and insurances, a valid option for their farm, and put more faith in internal strategies such as the debt management, the liquidity management and diversifi cation. Last, risk management is to a substantial degree performed at the household level, rather than at the farm level, with strategies such as cutting the private expenses and the off -farm employment. Th ese results hardly diff er according to the farm and farmer characteristics.

Enterprise risk management in integrated crop-livestock systems: a method proposition

“…In addition, according to Wauters et al . (2014), farm size does not affect perceived risk probability, impact and influence, except with respect to risk attitude. Larger farms tend to be less risk-averse than smaller ones.…”

“…The phases reflect COSO's components (COSO, 2004) through seven steps: (i) Internal Environment; (ii) Risk Preference; (iii) Risk event identification and analysis; (iv) Risk Evaluation; (v) Risk Response; (vi) Monitoring and Control and (vii) Objective Setting. In a change from COSO, and based on a substantial amount of literature (Akcaoz and Ozkan, 2005; Flaten et al ., 2005; Greiner et al ., 2009; Turvey and Kong, 2009; Schaufele et al ., 2010; Hoag, 2011; Sookhtanlo and Sarani, 2011; Broll et al ., 2013; Tudor et al ., 2014; Wauters et al ., 2014), the second step was created to address the willingness to take risks. During the expert interviews in the second stage of method development, it was suggested splitting the first step in order to also consider Objective Setting: thus, this was included as a seventh step.…”

Identifacação De Eventos De Risco Do Agronegócio

“…Demonstrando a carência do desenvolvimento da gestão de riscos no mundo, produtores rurais belgas demonstraram pouca familiaridade com seguros, contratos e mercados futuros (WAUTERS et al, 2014). Na Finlândia, foi verificado que há poucos estudos sobre a gestão de riscos no agronegócio (Leppälä et al, 2012).…”

How Risk Attitudes Affect the Implementation of Good Agricultural Practices in Sugarcane Farming

“…A risk-taker individual is usually more innovative since, in the early stages of innovation implementation, it is not always followed by success (Hanafie, 2010). Understanding farmers' risk attitudes can steer the policy in the right direction so that the objectives of the policy can be realized (Wauters et al, 2014).…”