WeRiManage – Putting a Price on the Cost of Weather

Weather Risk Management

About
WeRiManage

Even minor weather changes often have significant impact on the day-to-day operations and revenues of many businesses in sectors such as agriculture, energy, tourism and transportation but also on governments and households. About one-third of world GDP is affected by the weather. The WeRiManage project aims to offer a complete Weather Risk Management Framework.

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WeRiManage
Project objectives

To examine how firms perceive weather exposure and what actions do they take in order to manage and hedge weather risk.
To study how different economic sectors are exposed to weather and examine if there are differences in their hedging strategies.
To examine, at sector level, how weather exposure, weather risk understanding and weather risk hedging changed over time.
To accurately extract pricing densities for weather derivatives from the observed prices in the market.
To formulate a pricing framework for weather derivatives written on multiple different underlying assets/weather variables.
To reveal and discuss the possible risk management issues faced by companies in the weather market.
To link the pricing framework developed from the weather market with derivatives traded in related markets such as commodities and energy markets.