ABSTRACT

Arthur A. Small, III
Department of Meteorology
The Pennsylvania State University

"Weather, Risk and Decision-Making"

to be presented at the
Operations Research Colloquium tomorrow,
Tuesday, December 5, 2006
4:30--5:30 p.m. in 106 Business Building

A large share of economic activity is affected by variations in weather and climate. Energy, agriculture, transportation, tourism, and insurance are all major economic sectors deeply affected by weather and climate-related events. All these industries face pressing needs to improve their ability to understand and manage their weather-related risks. Needs arise also in the public sector, in disaster response, water management, and public health, among many other areas. The challenges facing these fields can be summarized as one of making better use of probabilistic information to improve decision-making. Value is unlocked when weather data and forecasts are translated into information that is directly relevant to the decisions confronting a user, and presented in formats that decision-makers can understand. The talk will present an overview of current research on the uses of probabilistic weather forecast information for decision-making and risk management. Particular attention will be paid to three problems: (i) generating and validating probabilistic forecasts from numerical models; (ii) pricing weather derivatives; and (iii) using probabilistic forecast information in water management.

Students with particular interest in weather risk might prepare for the talk by looking at a recent publication of the National Research Council, "Completing the Forecast: Characterizing and Communicating Uncertainty for Better Decisions Using Weather and Climate Forecasts", available from National Academies Press at:
http://www.nap.edu/catalog/11699.html