engleski

Research on weather risk management among large Croatian companies

Weather determines what shall we eat and wear, where shall we spent our holiday, how shall we travel, even what shall we do every single day. Therefore, it does not come as a surprise that research shows that 80% of global economy is, directly or indirectly, influenced by weather. And while weather may be the oldest risk businesses face with, it gained much needed attention only recently, as impacts of climate change became more obvious. Uncertainty in future weather conditions translates into uncertainty in future cash flows, which consequently leads to higher cost of borrowing capital. Regardless of the risk type, there are four basic management strategies – avoidance, acceptance, reduction and transfer – named in the order of their effectiveness. In the past, companies have simply ignored the weather risk, but today principles of weather risk management have become inevitable due to the heavy competition, worldwide economic crisis and climate change. Currently, weather derivatives present the most effective instrument of weather risk protection. For the purpose of this paper a research was conducted among large Croatian enterprises in order to assess their level of weather risk awareness, to determine which strategies they use to protect themselves from adverse weather and to determine to what extent are researched companies familiar with weather derivatives, as one of the newest and fastest growing derivatives market in the world. Findings imply that many companies acknowledge weather as a source of risk while only few of them try to actively protect themselves from financial exposure to weather.

weather risk; weather risk management; weather derivatives; survey research; large Croatian companies

nije evidentirano