Commodity risk management expertise partner
The increased volatility in commodities increases the volatility in the profit margin of firms, thereby increasing the cost of capital, and as a result increasing firm value and providing the firm with the capacity to innovate. As a result, commodity risk management has become a prominent strategy along with innovation and market orientation, as it reduces the risk-adjusted cost of capital and hence contributes to shareholder value.
Therefore, firms face the challenge to identify the effectiveness of risk management strategies and instruments, how to implement such a strategy and effectively execute such a strategy (for example taking optimal hedging positions in commodity futures and options markets or having an effective product development/marketing strategy).
CORMEC will develop into an eco-system with both a highly innovative character in (price) risk management research and a prime environment in which these instruments and strategies can be developed, applied and allowed to flourish. Crucial to this eco-system is a synergy with large corporations, innovative SMEs, government and international knowledge institutes in the field of price risk management enabled by the development of risk management instruments and strategies.
CORMEC is affiliated with Wageningen University (the Marketing and Consumer Behaviour Group) and the University of Illinois at Urbana-Champaign (Office for Futures & Options Research, Marketing & Decision Sciences Group) on topics of management of market risk in the agribusiness sector.
Fundamental and applied research on commodity risk management in relation to innovation and value creation. Applied research will be undertaken on a case-by-case contract-basis with industry partners.
CORMEC has developed a risk management training program that will enable market participants from primary, processing and retail in the commodity sector to optimize their risk management and hence enhance firm and shareholder value.
Relating fundamental and applied research to real-life contexts with cooperation with industry. Here, CORMEC works with new risk management strategies, such as financial risk management, market orientation and innovation as alternative strategies for creating firm value through advice, tools and other activities.
Cooperatives provide high resistance in times of crises and play a crucial role in all segments of the economy (e.g., agriculture, banking, insurance, healthcare and services) and society (e.g. enhancing solidarity). Further knowledge about how to enhance their (optimal) organizational structure, financial strategies, as well as operations and competitiveness is necessary.
Particularly, there is a need for research on the behavioural aspects of cooperatives in terms of (1) relationship between heterogeneous members and the cooperative as organization and (2) the behaviour of cooperatives in the market. In addition, cooperative leaders have to deal with the aforementioned behavioural aspects and require guidance on how to manage a cooperative that is financial viable and serving her members.
Current research topics include:
• Contemporary heterogeneity within the cooperative membership base, and how to best deal with this in a practical and constructive way
• How cooperatives can use their unique structure to successfully compete with investor-owned-firms (IOF’s)
• How to identify and label the stages of the cooperative life cycle, applied to the participant’s organisation, and map strategic action in order to capitalize on this and create value for the coop and its members by the action of “tinkering” (tactical readjustment)
• Other topics include performance measurements, allocated equity, preferred stock, free rider / horizon / portfolio issues, residual claimant constraints and residual control