MUHAMMAD FAIZ BIN BASIR AHMAD F12A237 SBP 4

Administrate the Environmental Risk in Agricultural System

Risk can be describe in one context a hazard or a danger that is an exposure to
mischance or peril. Environmental risk are the actual or potential treat of adverse effect on
living organisms and environment by effluents, emission, wastes, resources depletion arising
out of an organization. Their causes and characteristics are, however, very diverse. Some are
created by man through the introduction of a new technology, product or chemical, while
others, such as natural hazards, result from natural processes which happen to interact with
human activities and settlements. An agricultural system is an assemblage of components
which are united by some form of interaction and interdependence and which operate within a
prescribed boundary to achieve a specified agricultural objective on behalf of the beneficiaries
of the system.

In order to administrate the environmental risk in agricultural system, the risk

management must be taken to ensure the risk can be controlled. The risk management has
three interrelated component that is risk identification, risk estimation and risk evaluation. In
agricultural system. The sources of risk are diverse and interconnected. There are few types of
risk that can be identify in agriculture according to their sources. Systemic risk, production
risk, price risk, technology risk, financial risk and human resources risk are the risk that need
to be controlled.

Systemic risk which is rural salaries, particularly among agriculturalists, are

exceptionally vulnerable to comparable dangers in the meantime. Of these very between
related covariate dangers, climate is the most wild and regularly decimating hazard yet
sickness and diseases are comparably essential creation dangers. Indeed, even in this way, the
most dangerous is farm creation credit risk. Market risk or price risk can be concluded as
seasonal price fluctuations of agricultural product not only due to local production variation
but also affected by outside forces which is political reasons, import or export restrictions,
subsidies and globalizations.
 The risk management can be done after risk identification and its start with the
decision on the farm and at the household level. The farm will allocated the output to produce
and the land using right techniques. The manager of the farm will exactly knowing the
dimension, characteristic and correlation of the risk that might be effect the farm. The
manager must take the responsibilities to take the effective ways to manage the risk. The
strategies to mitigate risk are include risk transfer by spreading risk over a number of agents
instead of concentrating it in one agent (derivatives market), risk pooling by bringing together
the risky returns of two farmers that will then share the resulting outcome (insurance).
Diversification strategies in production, when he uses his resources in different activities
and/or assets instead of concentrating them on a single one (different activities or different
crops).

By managing the potential risk by implementing efficient techniques to the farm, the
manager can have more secure and gain profit since the farm have been improve. This risk
management will lead to a good practice among the farmer to improve their safety for human
and environment. In order increasing the economic variability, government must take an
action by giving policy that might be giving incentive to farmer in order to maintain their
practices and technologies to increasing their profit. Evaluation must be taken several times to
make sure the guide in the correct pathways.