AGEC 712: Applied Risk Analysis II

This course will provide the conceptual foundations of risk with applications to production, financial, and institutional risk problems. Emphasis is placed on developing and understanding risk theory, risk assessment and measures, response to risk, and risk management tools – focusing on portfolio diversification principles/insurance theory.

Development of tools to analyze production and financial risk problems unique to agriculture and agribusinesses. This course is a three-credit course, and it is divided into four modules.  

Module 1 reviews statistics and probability theory, volatility/risk distributions, and an introduction to risk theory and decision-making emphasizing stochastic dominance. 

Module 2 focuses on identifying risk and measuring sources of risks (Production, Financial, Price, Institutional, and Business risks) faced by agriculture producers, agribusinesses, climate change, and food safety. 

Module 3 covers strategies and tools used for managing risk.  This includes portfolio and real options analysis related to financial risks, Income statements/Balance Sheet (Budgets/capital projects), derivative instruments (futures and options), and Climate change and food safety management.  Module 4 covers risk and insurance; emphasis will be placed on risk and asymmetric information issues in crop insurance using advanced statistical methods, Copulas, simulations, and limited dependent variable methods. The syllabus is found here.