ABSTRACT
Weather risks refer to weather events which affect the revenues and earnings of a company in a negative way. Type and quantity of relevant weather parameters depend on the business area and can include events such as temperature, precipitation or humidity (Schirm 2001). These kinds of weather characteristics are called ‘‘noncatastrophic events’’ which typically have a high-frequency but low severity. They are contrasted with catastrophe-related low frequency-high severity risks, e.g. hurricanes, tornados, etc. Weather derivates have been developed to facilitate protection against profit impacts given adverse weather conditions but not for property or catastrophic risk protection (Clemmons 2002).
