Ex-ante evaluation of a cross-sectorial business model for risk management in new product development: the case of Haitian farming

With the rise of climate change, institutions are compelled to adopt new strategies to increase resilience toward natural disasters. For institutions providing insurance products to farmers, the probability of ruin becomes higher. How will agricultural institutions in regions with high occurrences of catastrophic risks survive? Since risks cannot be effectively managed exclusively in one sector, we have developed and evaluated a multisectoral business model in Haitian farming. To this end, in the summer of 2023, we interviewed 22 leaders of Haitian financial institutions. The research followed a framework outlining the different stages of new product development. This business analysis phase, which corresponds to stage four, is focused on evaluating the ex-ante business model. We used an interactive design approach for concept selection based on expert opinion. We prioritized intuitive assessment by experts to discover the most suitable implementation of the developed strategy. The study suggests that Minimum Extendable Compensation is the most suitable approach to risk management for the sectors involved, particularly regarding the principle of risk sharing and risk transfer. This new product is proposed to foster farmer resilience to natural disasters. In addition, partnership agreements promoting partial demonetization of transactions with the farmers are preferable to prevent liquidity limitation and possible moral hazards. Consequently, the derived approach can be applied to other small and medium economies, where the conventional agrarian insurance system presents itself as a massive burden for governments.