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Ugg Case Study Weather Derivatives Hedge

RMI 8370: United Grain Growers Limited Primary Teaching Objective This case allows students to consider fundamental issues of risk management. Why does it make sense for a firm to manage its risks? From where do these risks arise? How do risks propagate themselves throughout a firm? How do firms measure risk? Case Study Questions 1. UGG estimated that it would need C$150 million to carry out its strategic plans over the next two years. Will its internal resources provide reliable funding for this program? How much external financing might it need? 2. Like most firms, UGG faces a variety of risks. What elements of the business (revenues, costs, investment needs, ability to raise financing) might be affected by each risk? 3. What executives in the firm are responsible for handling the risks listed in Exhibits 5 and 6, and how can UGG hedge or mitigate its exposures? 4. Why should UGG (or any other firm) worry about these risks if investors can diversify them away? In particular, discuss how UGG’s ownership structure may affect its demand

Weather risk management and hedging case studies

A selection of articles and papers providing case studies on how industries and end-users utilise weather risk management, weather derivatives and weather risk transfer techniques to hedge risk.

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Risk Management Issues for Small Farms with Local Food Systems 
Choices Magazine 2013

How United Grain Growers tamed Mother Nature in completing the deal of the decade 
CFO Magazine Jun 2000

Construction, Ingenuity and Derivatives: A Profile 
Risk Management Solutions

The Potential Role of Weather Markets for U.S. Agriculture 
Cooerative Extension Service

The Effects of Weather on Retail Sales 
Martha Starr-McCluer Jan 2000

Hedging Maize Yield with Weather Derivatives 
Geyser J.M and T.W.G Van de Venter Jan 2001

Hotel Marketing Strategy 
Evolution Markets LLC

NYC Brewery Co. Weather Hedge 
Evolution Markets LLC

Can Weather Derivative Contracts Help Mitigating Agricultural Risk? Microeconomic Policy Implications for Romania 
Aslihan Spaulding, Murali Kanakasabi, Jianqiang Hao and Jerry Skees

THI Application to Insuring Against Heat Stress in Dairy Cows 
Xiaohui Deng, Barry J. Barnett, Dmitry Vedenov, and Joe W. West Feb 2004

Weather derivatives as an instrument to hedge against the risk of high energy cost in greenhouse production 
Ernst Berg, Bernhard Schmitz, Michael Starp 2006

Weather Derivatives in the Presence of Index and Geographical Basis Risk: Hedging Dairy Profit Risk 
Gang Chen and Matthew C. Roberts Apr 2004

Monsoon Risk Securitisation: Monsoon Options on Select MET Subdivisions 
G. Kotreshwar and Rekha Arunkumar  Dec 2006

A Dynamic Programming Framework for Using Weather Derivatives to Manage Dairy Profit Risk 
Gang Chen and Matthew C. Roberts 2004

Managing Irrigation Risk with Inflow-Based Derivatives: The Case of Rio Mayo Irrigation District in Sonora, Mexico 
Akssell J. Leiva & Jerry R. Skees

Pricing Weather Insurance with a Random Strike Price: An Application to the Ontario Ice Wine Harvest 
Calum G. Turvey and Alfons Weersink Jul 2005

Impact of Climate Change on Golf Playable Days in the United States 
Weather Bill Feb 2007

Weather & Film Box Office Revenue: The impact of precipitation and temperature on UK film box office revenue 
Weather Bill Dec 2007

Flight Disruptions and Weather: An assessment of weather's effect on United States airlines and airports 
Weather Bill Apr 2008

itravel2000 "Let it Snow!"  
Weather Bill

Protecting Profits in the Snow & Ice Removal Industry  
Weather Bill Feb 2009

Flagstaff Nordic Center Ski Season Guarantee 
Weather Bill

Protecting Revenue and Growing Sales in the Oil Heat, Propane & Natural Gas Industries 
Weather Bill Jan 2009

PGA Championship: Greater Hickory Classic at Rock Barn - Golf Tournament 
Weather Bill

PGA Event: BMW Championship - Golf Tournament 
Weather Bill