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The Risky Business of Weather

© Amy Marquis

Over the last few years, the West and Southeast have been suffering from serious drought. That means farmers have lost a lot of money. Rain deficiencies this summer alone have left countless counties eligible for U.S. Department of Agriculture emergency loans.

According to former Commerce Secretary William Daley, "Weather is not just an environmental issue — it is a major economic factor."

Perhaps that's why, for many businesses, weather risk management has become a safety net. It’s the newest branch of meteorology, and it combines forecasting with economics and insurance. In other words, if a farmer senses drought may be around the corner, he may choose to buy an insurance policy that would reimburse him if his fears were realized.

With so many businesses out there dependent on the weather, the idea behind this burgeoning field is simple: Where there is money to be lost, there is money to be made.

For those clamoring to get their foot in the door, you're in luck! The field of meteorology is growing, and the wave of the future is called weather risk management.

Get more of Stephen Bennett's perspective, plus points of view from other meteorologists in How To Break Into Meteorology. To find out more about this field, check out the Weather Risk Management links.

Stephen Bennett is a senior meteorologist who is involved in energy futures at Enron Research Group, an international energy-trading conglomeration. His job doesn't deal with insurance - it has more to do with getting the best price for energy based on the forecast. Simply put, that means he advises energy traders on the long-term forecast so they are able to buy and sell wisely, and subsequently make money for their company.

Stephen appreciates his unique position, because he says the small team he works with offers him an experience that’s different from working for a private company with tens of meteorologists. Because he is only one of a few, he enjoys expert status. And Stephen is a lucky guy, because most who get jobs like the one he has must at least earn their master’s in meteorology. While he has begun to work on his master’s, Steve has only a bachelor’s degree under his belt. But he certainly earns his keep! A typical day for him begins bright and early...

“We come in about five," he explained. “At about six we start working on a report that we issue for our commodity traders. [It's] probably about 15 or 20 pages that’s all weather data. The idea of the report is to give our traders a sense of what the weather is going to be for the next two weeks...So the idea is for us to take the picture that everybody’s seeing. We look at what The Weather Channel shows, we look at what the government is putting out, we look at what the private consulting firms are doing, and then we try to give our traders the best assessment of what’s happening.”

Courtsey: Comstock.com

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