Geneva December, 2007
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W Geneva December, 2007 World Meteorological Organization Basics of Weather Risk Management
description
World Meteorological Organization Basics of Weather Risk Management. Geneva December, 2007. General Weather and Extreme Weather. General weather also causes economic loss. Risk from General Weather. Adverse General Weather Temperature Precipitation Wind speed - PowerPoint PPT Presentation
Transcript of Geneva December, 2007
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GenevaDecember, 2007
World Meteorological Organization Basics of
Weather Risk Management
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General Weather and Extreme Weather
Four Largest US Weather Losses, 1980 - 2005
0
20
40
60
80
100
120
Katrina 1988 Drought 1980 Drought Andrew
$ B
illio
ns
0.0
20.0
40.0
60.0
80.0
100.0
120.0
source : NOAA
General weather also causes economic loss
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Risk from General Weather
Adverse General Weather– Temperature
– Precipitation
– Wind speed
– Other measurable weather variables
Can affect– Costs
– Revenues
– Margins
of Government, Commercial and NGO entities.
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Example General Weather Risk Program
Warm Winter means Poor Sales of Gas for Heating
Avge Winter Temp NE US City
37
38
39
40
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43
44
45
46
47
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
Avg
e T
emp
(ºF
)
Adversely Warm
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Example General Weather Risk Program
Outline Example Program
Buyer Natural Gas Distribution UtilityCoverage Loss of Revenue resulting from adversely warm winter
weather.Weather Risk Average Temperature November-MarchWeather Station City Airport WBAN _____Period 1 November 200Q – 31 March 200RAttachment Average Temperature > 43.6ºF Payment US$250,000 for every 0.1ºF above the attachment, to
a maximum payment of US$ 7,500,000Premium US$xxx,xxx
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Example General Weather Risk Program
Effect of Tavge Program NE US City
37
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1961
1964
1967
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1982
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1988
1991
1994
1997
2000
2003
2006
Avg
e T
emp
(ºF
)
attachment
Example Program Manages Warm Weather Risk
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Example General Weather Risk Program
Year Tavge ºF Attachm Difference Payment1973 45.0 43.6 1.4 $3,491,7221974 44.1 43.6 0.5 $1,322,8481975 45.3 43.6 1.7 $4,289,4741982 44.6 43.6 1.0 $2,564,5701990 45.4 43.6 1.8 $4,385,7621994 44.2 43.6 0.6 $1,596,0261997 44.1 43.6 0.5 $1,173,8411998 43.7 43.6 0.1 $139,0731999 45.0 43.6 1.4 $3,442,4342001 46.5 43.6 2.9 $7,134,106
Example Program 1961 - 2006Hypothetical Outcomes
Hypothetical Outcome of Example Program
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Management of General Weather Risk
General Points:
• Based on volumetric relationship between adverse weather and adverse economics
• Parametrically structured: based on measurable weather variables (index-insurance or physically based derivative)
• Respond to current weather conditions in relation to historical weather data
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Disclaimer
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