Weather risk
As weather risk is defined as the dependence on production and sales volumes or the cost factor of the weather. Agriculture , whose harvest quantities can be strongly influenced by the weather , is traditionally one of the sectors with a high weather risk . Other sectors with a high weather risk are the construction sector , the beverage industry , where bottlers for mineral water or soft drinks are heavily dependent on summer temperatures; the tourism and leisure industry but also municipalities , whose street cleaning costs, for example, are heavily dependent on weather conditions.
Weather risks can be so significant for a company that they are part of the company's internal risk management and weather derivatives are used to reduce these risks.
Weather risks can be covered by weather insurance and parametric weather insurance.