Risk Management, Energy & Finance Glossary - W, weather derivatives Risk Management, Energy & Finance Glossary - W Return to Risk Limited home page from this Risk Glossary


The Risk Limited Glossary

W:
 Wasting Asset - a derivative instrument that may expire worthless after a stated time or event.  Options, Rights, and Warrants are examples.

Watt - the common base unit of power in the metric system. One watt equals one joule per second. It is the power developed in a circuit by a current of one ampere flowing through a potential difference of one volt. One Watt = 3.413 Btu/hr.

Weather Derivative - a derivative instrument whose payoff is based on a specified weather event and is used to hedge the financial impact of weather fluctuations.

Weather can adversely impact company revenues or increase costs. Use of weather derivatives can help mitigate the impact that adverse weather may have on profitability and reduce earnings volatility. In 2001 it was estimated that the weather derivatives market had grown to a $4.2 billion notional market value with approximately 4,000 contracts traded.

Key participants in the weather derivatives market include: energy marketers/utilities, insurance and reinsurance companies, financial institutions, over-the-counter (OTC) derivatives brokers, insurance brokers, and most recently hedge funds.

Weather derivatives are not the same as insurance, which is generally for low-probability events like hurricanes and tornados. In contrast, derivatives cover high-probability events like dryer-than-expected summers.

Wheeling [electric power] - the process of transferring electrical energy between buyer and seller in different geographical areas by way of an intermediate utility or utilities.

Wiener Process - a type of Markov Stochastic process.  It refers to changes in value over small time periods. Sometimes, this process is also called Brownian motion.

Wrangle - an options spread that is long (short) both a ratio call spread and a ratio put spread.

Writer Extendible Option - an option whose expiration is extended if some pre-defined condition is met.


Click to go directly to the next group of Finance, Energy & Risk glossary terms: X

Click to go directly to the prior group of glossary terms: V

Click on bar below to close this Risk Glossary display window.

Risk management consulting, FAS 133 Risk management consultants, risk audits Risk management audits, Sarbanes-Oxley Risk controls, Sarbanes-Oxley compliance Risk management glossary, FAS 133 Risk management policies and procedures, governance controls compliance Risk management news, FAS 133 Energy risk management services, trading, weather derivatives Risk management, FAS 133, hedge accounting Risk management experts, weather derivatives Risk audits, compliance, risk register Risk control, governance, Sarbanes-Oxley Risk management library, glossary, energy, technology Risk management procedures and register Risk management expert witnesses, litigation support Energy risk management experts, FAS 133

©Copyright 1997-2007, Risk Limited Corporation, All Rights Reserved.