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Addison Sears-Collins, M.S.

My M.S. thesis is a two part research project in which I will examine the effects of uncertainty in hurricane intensity estimates on catastrophe bonds. A catastrophe bond is a security typically issued by a reinsurance company to raise money in the event of a pre-defined catastrophic event such as a major hurricane or earthquake. It appears that there are two problems in the nascent catastrophe bond market:

1) The trigger mechanisms used in catastrophe bonds are measured imprecisely, with the degree of imprecision depending on the choice of trigger mechanism, the available sensor systems, and the methods by which meteorologists analyze the resulting observations.

2) Last year's record hurricane season showed that the trigger mechanisms do not appear to relate well to the economic harm caused by weather phenomena, suggesting that the triggers were not selected on the basis of adequate understanding of relevant meteorology.

Both problems will be documented in this research, and perhaps ameliorated in part, by a thorough study of the relevant meteorology and meteorological practices.

Publication: Roulston, M., G. E. Bolton, A. N. Kleit, A. L. Sears-Collins, 2006: "A laboratory study of the benefits of including uncertainty in weather forecasts," Weather and Forecasting, Vol. 21, No. 1, pp. 116-122.

 

Rain or shine, they aid business climate. Startup offers financial hedge against weather
San Francisco Chronicle -- (June 6, 2007)

"Weather Matters to Wall Street," Toronto Star -- (May 29, 2006)

Hedge Funds Pluck Money From Air in $19 Billion Wether Gamble, Bloomberg - USA -- (August 2, 2007)

"N.Y. Firm Promises Weather Risk Management Tools for Corporations, " Insurance Jouranl -- (Jan. 26, 2007)

Completing the Forecast: Characterizing and Communicating Uncertainty for Better Decisions Using Weather and Climate Forecasts (2006) -- Board on Atmospheric Sciences and Climate (BASC)

"Climate Change and the Potential of Coal Gasification," by Samuel C. Schon and Arthur A. Small, Geotimes (September 2006)

"A laboratory study of the benefits of including uncertainty in weather forecasts," Roulston, M., G. E. Bolton, A. N. Kleit, A. L. Sears-Collins, 2006, Weather and Forecasting, Vol. 21, No. 1, pp. 116-122.