RISK MANAGEMENT

"Risk management in its broadest sense involves

the identification, estimation, assessment,
monitoring, evaluation, and control of risk, including
preventative, reactive and unorganized processes to
deal with them. Institutions for this purpose include
courts, legislatures, administrative agencies,
business enterprises, labor unions, research
institutions, citizen groups, and educational
institutions, as well as individuals."
 Types of Risks in Rural Marketing

Natural Causes like destructive winds, heavy rain-

floods etc.

Man Made Causes like strikes, theft, etc.

Reduction in Values due to quality deterioration,

price variation due to changing consumer
preference, price variation due to delays, due to
changes in market environment, due to low
productivity, etc.
 Risk Coverage Methods
Self Insurance.
Price Regulation Mechanisms by the Government.
Risk Sharing by federation groups.
Insurance Coverage – Agricultural & Livestock.
Futures Market – Pricing & Delivery on diff. days.
Physical presence of the commodity is not necessary.
Hedging – Equal & Opposite transactions on the cash
and futures market to protect against adverse price
movements.
Forward Contracts – Delivery for future at fixed prices.