A Hybrid Approach to Explore the Risk Dependency Structure among Agribusiness Firms

Zhimei Lei , Kuo-Jui Wu , Li Cui, Ming K Lim

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Abstract

Although the risk management of agricultural firms is important, studies on the extreme risk dependence among agribusiness firms are minimal due to the diversity and complexity of the risks faced by agricultural firms. In this study, we developed a hybrid approach to analyse and uncover the potential risk dependence among agricultural firms. We examined thirty-two agricultural companies to study their dependence structure for risk losses. Three primary findings emerged. First, risk dependence is strong with an average value of 0.96. Second, the dependence structure is hierarchical and includes two network communities. Third, some key agricultural firms were identified in the dependence structure. These key firms are critical for the transmission of negative impacts across agricultural firms. Correspondingly, we suggest measures and strategies (such as improving the level of technological innovation and joint risk resistance capability) to reduce the impact of risk dependence.
Original languageEnglish
Article number533
Number of pages17
JournalSustainability
Volume10
Issue number2
DOIs
Publication statusPublished - 16 Feb 2018

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Bibliographical note

This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/).

Keywords

  • risk losses
  • agribusiness
  • minimum spanning trees
  • copula
  • dependence structure

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