This is not the same as insurance, which is for low-probability events like hurricanes and tornados. In contrast, derivatives cover high-probability events like a dryer-than-expected summer.
Investment dictionary. Academic. 2012.
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Weather derivatives — are financial instruments that can be used by organizations or individuals as part of a risk management strategy to reduce risk associated with adverse or unexpected weather conditions. The difference from other derivatives is that the underlying … Wikipedia
Weather risk management — is a type of risk management done by organizations to address potential financial losses caused by unusual weather.OverviewEnergy, agriculture, transportation, construction, municipalities, school districts, travel, food processors, retail sales… … Wikipedia
Weather Future — A type of weather derivative that obligates the buyer to purchase the value of the underlying weather index measured in heating degree days (HDD) or cooling degree days (CDD) at a future date. The settlement price of the underlying weather index… … Investment dictionary
Derivative (finance) — Financial markets Public market Exchange Securities Bond market Fixed income Corporate bond Government bond Municipal bond … Wikipedia
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Alternative Risk Transfer — (often referred to as ART) is the use of techniques other than traditional insurance and reinsurance to provide risk bearing entities with coverage or protection. The field of ART grew out of a series of insurance capacity crises in the 1970s… … Wikipedia
Dérivé climatique — Un dérivé climatique est un instrument financier qui peut être utilisé pour se prémunir contre des risques liés au climat. L actif sous jacent peut ainsi être la température, la quantité de neige tombée ou les précipitations. A la différence des… … Wikipédia en Français
Derive climatique — Dérivé climatique Un dérivé climatique est un instrument financier qui peut être utilisé pour se prémunir contre des risques liés au climat. L actif sous jacent peut ainsi être la température, la quantité de neige tombée ou les précipitations. A… … Wikipédia en Français
Cooling Degree Day - CDD — The number of degrees that a day s average temperature is above 65o Fahrenheit and people start to use air conditioning to cool their buildings. The price of weather derivatives trading in the summer are based on an index made up of monthly… … Investment dictionary
Heating Degree Day - HDD — The number of degrees that a day s average temperature is below 65o Fahrenheit (18o Celsius), the temperature below which buildings need to be heated. The price of weather derivatives traded in the winter is based on an index made up of monthly… … Investment dictionary