Until it hurts their stock price many companies will be unwilling to buy products that can hedge against the risk that hot or cold climate conditions pose to their business, a weather derivatives expert advised last night.
William W. Windle, senior vice president for weather and energy products with Swiss Re's Capital Management and Advisory unit in New York, made his comments during a briefing on the market that underwrote more than $5 billion in climate risk last year, even as some firms shy from the product.
"Its not uncommon for companies, particularly in the energy sector, to have an understanding of what their exposure is, but choose not to manage that," said Mr. Windle. Many, he said, can calculate the dollar loss due to a reduction in power demand with extreme precision.
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