Abstract
These notes address the role of weather derivatives in managing volumetric exposure induced by variation in the weather. My objective is to demonstrate that weather risk management problems are meaningful, in that the risk faced by the afflicted parties is compelling, and also to demonstrate that weather derivatives are an effective means of dealing with this risk. I present examples from fuels transport, agriculture, and power generation that illustrate the role of weather derivatives in managing profit fluctuations. I also discuss the role of market makers in the weather derivatives market, and contrast this with the service provided by intermediaries in other, more conventional derivative markets.
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© 2001 Springer Science+Business Media New York
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Jefferis, R. (2001). Industrial Risk Management with Weather Derivatives. In: Figlewski, S., Levich, R.M. (eds) Risk Management: The State of the Art. The New York University Salomon Center Series on Financial Markets and Institutions, vol 8. Springer, Boston, MA. https://doi.org/10.1007/978-1-4615-0791-8_6
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DOI: https://doi.org/10.1007/978-1-4615-0791-8_6
Publisher Name: Springer, Boston, MA
Print ISBN: 978-1-4613-5241-9
Online ISBN: 978-1-4615-0791-8
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