Abstract
The energy sector is perceived as one of the most exposed sectors to the consequences of weather risk both directly (damages of its infrastructure) and indirectly (frictions to the energy supply–demand balance). The main aim of this paper is to provide an insight into the impact of weather risk on economic activity of companies operating in the energy sector in Poland. The empirical objective is to examine whether energy companies: (i) identify their relevant weather risk exposures; (ii) evaluate the impact of weather risk in the cost-revenues dimension; and (iii) implement weather risk management tools, in this case—weather derivatives. In a methodical context, this study relies on a unique research approach and derives from works that examine companies’ risk disclosures in annual reports, by applying textual content analysis. The results indicate that Polish energy companies recognize the impact of weather risk on their performance, also in the cost-revenues dimension. However, although the reported weather risk management methods were diversified, the examined companies did not use weather derivatives to hedge their weather risk exposures. In the overall dimension, the companies leading with the perception and management of weather risk were diversified regarding performance and market size.
Highlights
Weather risk-related studies commonly address the relevance of the global climate change we face nowadays
The problem of changing weather conditions is studied in the literature from a variety of angles, with reference to socio-economic impacts and long-term and short-term disastrous consequences of global warming
The manifestation of weather risk could be the damage of infrastructure, which is often a result of
Summary
Weather risk-related studies commonly address the relevance of the global climate change we face nowadays. The growth of average temperatures is correlated with the growing number of temperature anomalies observable worldwide and is responsible for numerous weather-related disasters. This trend inevitably continues, as 2016 and 2017 were ranked respectively as a first and second warmest years since 1880 [2,3]. The analytical context embraces the socio-economic impacts of climate change (e.g., [4,5]) and the disastrous weather-related consequences of global warming (e.g., [6] with examples for European region and [5] in US context)
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