Managing risk is an important part of farming and its management is a concern for
those governments which include this as one of their agricultural policy objectives. This
report presents a framework for the analysis of risk management in agriculture that can be
used for the analysis and efficient design of policies in this area. The principal concept is
an holistic approach as opposed to a linear approach. A linear analysis dealing with only a
specific source of risk, a specific farmer’s strategy, or a specific policy measure is likely
to lead to inefficient policy choices. Risk management should be analysed as a system in
which there is interaction between many elements. These elements have been organised
around three axes: the sources of risk, farmers’ strategies and government policies. A
number of issues and concepts are crucial to the understanding of these interactions and
must be discussed from all three axes.