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Weather derivatives - the financialization of weather

Updated Monday, 16th December 2019

Is it possible to manage the risks presented by nature, such as too much rain at the wrong time of the year and very harsh frosts?

Listen to the discussion below, as John Allen and Michael Pryke talk about the abilities of finance to offer a solution to risks presented by nature.

Transcript

This work is linked to the Environment and Society course - DD213, which studies the entanglements between society and the environment. And explores how financial markets are being a solution to some of the risks to firms and their profitability presented by nature. It broadly looks at how weather such as severe drought, too much rainfall, unusually warm winters and so on, can be quantified and turned into financial instruments called ‘weather derivatives’, specific financial contracts engineered to enable firms potentially exposed to such weather variables to manage the associated risk to their profitability.

 

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