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Issues of management of diverse (natural, technical, market, financial, criminal, and policy)
risks in agrarian sectors are among the most topical in academic, business and policy debates
(Weaver and Kim, 2000; Babcock, 2004; Humphrey and Memedovic, 2006; Shepherd et al.,
2006; OECD, 2008; Olsson and Skjöldebrand, 2008; Ramaswami et al., 2008; Deep and Dani,
2009; Dani and Deep, 2010; Schaffnit-Chatterjee, 2010; CDC, 2011; Trench et al., 2011;
Behdani, 2012; CIPS, 2012; RPDRM, 2012; and EU, 2013). Newly evolving uncertainty and
risks associated with the progression of natural environment, products and technology safety,
social demands, policies, economy and globalization, put additional challenges on the existing
system of risk management.
Most risk management studies in agrarian sector predominately focus on technical methods
and capability to perceive, prevent, mitigate, and recover from diverse threats and risks
(Barker, 2005; Luning et al., 2006; Jaffee et al., 2008; DTRA and IIBR, 2011; and Hefnawy,
2011). In a majority of economic publications, a neoclassical approach is applied; the risk is
studied as other commodities regulated by market supply and demand, and farmers’ willingness
to pay for an insurance contract in relation to agent’s risk aversion, risk probability and
magnitude of damages modeled (OECD, 2008; and Gerasymenko and Zhemoyda, 2009).
Nevertheless, market and private failures are acknowledged, and the need for public
intervention in risk management is increasingly recognized. At the same time, risk
management analyses largely ignore the significant ‘human nature’ (bounded rationality, opportunism)-based risks, the critical factors for the managerial choice such as institutional
environment and transaction costs, and diversity of alternative (market, private, collective,
public, and hybrid) modes of risk management.
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