
298 Operational Risk Control
䊏 Clauses in policies, and
䊏 Dynamic premiums.
Weather derivatives constitute a precedent.
2
They also attest that financial instru-
ments are in full evolution. The hypothesis made in the mid-1990s that if an investor
can buy a derivatives contract based on an index, then why not do so with the
underlying probability of an earthquake or hurricane, proved right. Since 1997
investors have been able to buy or sell a contract whose value depended entirely
on:
䊏 Fluctuations in temperature, or
䊏 Accumulations of rain or snow.
Some weather derivatives pay out if the amount of rainfall at a specified location
ranged between 30 and 50 ...