| dc.description.abstract | Financial risk management can help horticulture firms to stabilize cash flows, reduce the risk of
insolvency, manage taxes better, and focus more effectively on their primary businesses. Effective
risk management allows corporations to weather difficult situations and be able to survive the fallout
of any losses or scandals. The objective of financial risk management is to reduce chances of a
vulnerable situation such as variability of the net cash flows and the inability to meet prior claims
on the business with the cash generated by the firm, while achieving the highest possible returns
for the shareholders. The inability of the management to identify, measure, prioritize, treat and
monitor risks that affect horticulture business on a timely basis is the key challenge which the
management needs to address.
The study reviewed literature on evolution of financial risk management to trace the origin of risk
management and determine financial risk management strategies used to manage risk. A detailed
analysis of sources and financial risk management strategies utilized by horticulture firms were
examined to evaluate their effectiveness in minimizing the variability of net cashflows to farmers.
Empirical studies that focus on effects of financial risk management strategies were reviewed to
establish those strategies which influence performance and value of horticulture firm. Studies on
risk management reforms and practices in horticulture business were reviewed to evaluate their
effects in reducing cash flow variability.
Five key findings emerge from the study. Firstly, horticulture firms employ a range of financial
risk management strategies that include insurance, hedging, and diversification and the use of
commodity linked bonds to enhance firm's performance since there is no single strategy which can
be utilized to manage all horticulture risks. Secondly, Literature review indicates that a number of
authors have adopted risk management process models that have, three, five or seven steps.
However, these varied steps can be summarized as risk identification, assessment, prioritization,
monitoring and control. Thirdly, horticulture firms that adopt and implement financial risk
management strategies improve their performance in terms of increased sales, earnings, profit and
market share. The improvement in firm performance is attained particularly when there is strategic
fit and alignment between entrepreneurial culture, organizational strategy, management styles and
various contextual factors. Fourthly, most of the existing risk management models are not
appropriately aligned to the unique, dynamic and risky conditions related to horticulture farming
and business. Lastly, the impact of the growth of exports of cut flowers on the performance of
horticulture firms in developing countries has not received much attention from researchers. | en |
