What are the Risk Preferences (Attitude Towards Risk), Most Important Risk Sources and the Risk Management Tools Used in the Norwegian Aquaculture Industry? Empirical Study on the Norwegian Aquaculture Industry

Abstract

This study collected thirteen responses from companies in the Norwegian aquaculture industry to gain empirical information on the risk preferences (attitude towards risk), important risk sources and the current usage of risk management tools in the Norwegian aquaculture industry. The results from the survey describe the fish farmers’ attitude towards risk and places a majority of fish farmers on a spectrum of risk-neutral to risk-seeker. The most critical sources of risk are ordered from most important to least important in the following way; production risks (diseases, escaping and bio-physical shocks), price or market risk (future salmon price), institutional risks, demand, input costs, and technology and moral hazard (both are tied for last place). All respondents use insurance, while slightly over half of the respondents use future/forward contracts to mitigate risks. The fish farmers also gave a moderate rating to the overall effectiveness of insurance and their current risk management strategy. The results from the survey closely resemble a previous study conducted in the US agriculture industry.