Weather Risk Management: Mapping the development towards weather derivative trade
Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
70% of all companies are weather dependent. There exist several ways to manage weather risk. Through the development of weather derivatives companies are given more sophisticated instruments to hedge a business against adverse weather. The problem is that no one knows to what extent weather derivatives will be used in the future. The purpose of the thesis is to map the development towards weather derivative trade in the Nordic region. An overview of the market development will be presented. We have made a qualitative study. Four weather dependent industries were selected; energy, consumer products, insurance and real estate, interviews were conducted with CFOs and risk managers. Interviews were also carried out with three important market actors; Enron, Electrabel and SMHI. The weather derivative market faces a bright future. Awareness, curiosity, acceptance and familiarity with weather risk management and especially weather derivatives are gaining. The market is awaiting the ‘good example’. The Nordic region will have a handful of active participants before the end of 2001, and we foresee a weather exchange with fair activity within three to five years.
Place, publisher, year, edition, pages
IdentifiersURN: urn:nbn:se:su:diva-2265OAI: oai:DiVA.org:su-2265DiVA: diva2:191189