Sharing risks in agriculture; principles and empirical results

AbstractThe risk environment of farmers is changing. For example, price and production risks are increasing and governments increasingly encourage agriculture to find private market solutions for catastrophic risks like floods and epidemic diseases. We studied risk management strategies like insurance — in which risks are shared with others - to find out whether such strategies provide opportunities for farmers to deal with the new risks with which agriculture is confronted. We concluded, on both theoretical and empirical grounds, that risk-sharing strategies do provide such opportunities. From a theoretical perspective, because risk-sharing tools are in principle advantageous to both individual farmers and society as a whole, and from an empirical perspective, because farmers already perceive risk-sharing, especially insurance, as an important strategy to manage risks. The empirical results are based on a questionnaire survey among Dutch livestock farmers. Areas are identified for further research, amongst other things, with respect to risk-sharing strategies for price risks and epidemic livestock disease risks

Audit failure, litigation, and insurance in early twentieth century Britain

The relationships between audit failure, judicial fault-finding and the availability of professional indemnity insurance have been debated by legal and accounting writers in both academic and professional circles. This paper adds an historical perspective to the current literature by presenting a review of cases involving allegations of auditors’ negligence over a fifty year period starting with the first significant case involving the question of auditors’ duties. Amateur auditors who failed to carry out a proper audit could expect little sympathy in the professional press but when large law suits were brought against recognised accountants, the profession was forced to consider the risks of the consequences of adverse judicial decisions. It was not long before practitioners sought to manage those risks through professional indemnity insurance. However, we find no evidence that the availability of insurance increased auditors’ risk by opening the floodgates of litigation