An (Un)Sustainable Business Model of a Mutual Fund in the EU Common Agricultural Policy—The Case of Croatia

Agriculture faces climate change, price volatility, and policy uncertainty. Because traditional agricultural insurance instruments often prove insufficient to address these risks, the Common Agricultural Policy (CAP) has introduced additional risk-management instruments such as mutual funds. The paper applies the Business Model Stress Testing framework to assess the robustness and adaptability of a mutual fund business model. The sustainability of the mutual model depends on building trust, enabling legislation, ensuring transparent governance, diversifying funding sources, agri-tech and alignment with support measures are the most critical factors. Within the current institutional framework, the lack of cooperative tradition and management capacities, the application of mutuals is hardly feasible for Croatia. Instead of a collective risk-sharing instruments approach, the paper suggests supporting the cooperation of stakeholders from different risk layers in harnessing digital technology and AI in developing enhanced agricultural risk management. Even though such an approach could be fuzzy too, it could bring impact faster and even contribute to the relevancy of the mutual model. The paper contributes to the literature on sustainable business model innovation in agriculture that enhances farm resilience in high-risk environments. This exercise might have policy implications for transition economies seeking to operationalize innovative tools in climate risk management and rural development.