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Technology Stocks : The *NEW* Frank Coluccio Technology Forum -- Ignore unavailable to you. Want to Upgrade?

To: axial who wrote (8566)	12/30/2004 5:48:25 PM
From: Frank A. Coluccio	Read Replies (1) \| Respond to of 46821

Jim, once again you've touched on some fascinating and eye-opening points for which I can only thank you for taking the time. From the site whose URL you posted, I found the opening description of this discipline likewise intriguing, especially with respect to the liabilities implied: --- What Is Weather Risk? Weather risk is the potential impact on your business, both with respect to overall profitability or simply success/failure, that relates directly or indirectly to the weather. The U.S. Department of Commerce estimates that nearly one-third of the U.S. economy, or $3.5 trillion, is modulated by the weather. Financial statements are awash with comments such as “income decreased $7.2 million as a result of wetter than normal conditions” or “shipments were down 5.5% due the cooler temperatures during the summer months.” In the past, statements such as these were accepted as part of doing business, however, blaming poor results on weather is no longer an excuse accepted by stakeholders. Weather risk can be defined as financial gain or loss due to a change in weather conditions over a period of time. That period of time can be hours, days, months, or even years. For instance, an outdoor concert has a period of weather risk over the course of several hours, the time of the concert, whereas a wind-generated power facility may have a period of risk spanning several years." --- Keep it coming, Jim, you're posting some good stuff here. On "guaranteed snowfall": --- Guaranteed Snowfall Whether you are a city trying to keep your streets clear or a ski resort intent on keeping your slopes crowded, the amount of snowfall within a season is crucial. GuaranteedSnow helps manage the financial risk of too much or too little snow by offering financial reimbursement for losses due to more or less snowfall than a predetermined seasonal level. Scenario: A suburban city near Boston has a limited budget for snow removal. On average, when it snows more than two inches during any given snowfall, it costs the city about $200,000 to plow the streets and clear the sidewalks. When the city experiences more than 10 snowfalls a year where it snows more than two inches, money must be pulled out of other programs to cover these costs. Solution: The city takes advantage of GuaranteedWeather®'s GuaranteedSnow option, which after 10 two-inch snowfalls, pays out $200,000 for each subsequent snowfall greater than two inches. * Maximum payout is determined case by case depending on the customer's needs. [ see graphic at: guaranteedweather.com ] This solution uses a cap structure to manage weather risk. --- It would be interesting to read some opposing or contrasting views to Jim's posts, as well, not to mention some real life experiences in dealing with such instruments as the one posted immediately above. ------ FAC frank@fttx.org