By Joey Gardiner, 18 June 2001 15:30
NEWS WeatherXchange.com has offered a ray of hope to firms blighted by bad weather. WeatherXchange.com allows businesses, which are affected by the weather, a chance to reduce their risk by trading in weather derivatives. It claims to be able to stop ice-cream vendors from being left out in the cold due to drizzly summers. The dot-com is a joint venture between the Met Office - which will provide all of the information and forecasting - and investment vehicle Umbrella Brokers. Weather derivatives trading hasn't taken off in Europe, despite being a $9bn industry in the US. WeatherXchange.com says 70 per cent of firms - from energy companies to air conditioning vendors - are in some way dependent upon weather conditions. The system works by using weather data to set a price for the risk a business is exposed to. Then an ice-cream salesman, for example - can draw up a contract granting businesses compensation for every day the temperature fails to reach a certain level. Cindy Dawes, MD of WeatherXchange.com, said the growth of the market in Europe has been hampered by the lack of a single information source to get weather data from. She added: "We will now provide all the components so the trading of derivatives can flourish." However, with the investment climate distinctly inclement for dot-coms of every type, WeatherXchange.com will do well to weather the storm.
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