21 of 23 people found the following review helpful:
More expensive than informative., 2000-07-21
Weather and energy derivatives constitute a 'hot' topic in the derivatives market with new articles, reviews and websites sprouting everywhere. So, this book may seem a timely publication on the topic, given the fact that there are very few publications available on this topic. However, unless you know nothing about the subject, I do not recommend to buy this book: timeliness seems to be its only quality.
Most articles are descriptive of products and markets and contain little information of interest to risk managers / traders / insurance professionals working in the field. The article on options is a general article on Black Scholes with little or no relevance to energy or weather derivatives.
In brief, it looks as if this book were written for purely commercial purposes. Definitely not worth its high price.
8 of 8 people found the following review helpful:
A good basic text on insurance and weather derivatives (2), 2000-04-17
Since my first review, a number of people have asked for more comments on this book. I have therefore written a more detailed review:
This book contains a series of articles covering developments in the areas of Insurance Derivatives, Securitisation and Weather Derivatives. The Weather Derivatives section comprises four articles written by key industry players. It serves as a useful introduction to the weather derivatives market for the newcomer.
The first article provides a broad introduction to weather derivative instruments, contrasting them with weather insurance products. It looks at the weather risk market in terms of the energy chain, from producers through to consumers. The article gives an overview of the most common type of weather derivative presently traded, those based on "degree days". Finally, valuation of weather derivatives is touched on.
The second article presents the current state of the weather derivatives market and summarises the types of deal that have been entered into to date.
The final two articles provide a more in-depth analysis of pricing degree day instruments and cover issues such as: · Establishing correlations between revenue streams and temperature variables; · Use of historical data to extrapolate valuations, including a brief look at the appropriate selection of data and `de-trending' issues; · Introduction to stochastic temperature modelling; · Using value at risk techniques in the context of weather derivatives.
Some of the articles in the book are freely available in the public domain, and this may deter potential purchasers interested in weather derivatives from buying the book. In addition, the book would benefit from some advanced articles covering the use of more sophisticated valuation techniques. As it stands, however, this book is a useful introduction for newcomers to this rapidly growing market, with well chosen articles that provide a good basic grounding.
10 of 10 people found the following review helpful:
A good basic text on insurance and weather derivatives, 1999-11-19
There are only four chapters on weather derivatives themselves and these seem, at a glance, to be mainly re-writes of material that is already available on the internet, e.g. one written by Enron, one by Southern Company Energy Marketing.
Nevertheless, the contributors are key players in the market and this book serves as a useful summary of the available literature. I would have liked to see some advanced material, including explanation of more sophisticated pricing models, but that is perhaps best left to a subsequent text.
The book is certainly not cheap, though it is not unreasonably priced - especially when compared to the amount of money companies are throwing away through failing to manage their weather risks...