A Market for Weather Risk? Conflicting Metrics, Attempts at Compromise, and Limits to Commensuration

Bibliographic Data

ID5820428
AuthorsIsabelle Huault (University Paris Dauphine, France), Hélène Rainelli-Wei, Hélène Rainelli-Weiss (Sorbonne Graduate Business School, France)
Year2011
Volume32
Issue10
Pages1395-1419
Publication date2011-10-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueOrganization Studies (JOURNAL)
Journal identifiersISSN: 0170-8406 • E-ISSN: 1741-3044
PublisherSAGE Publishing (PUBLISHER • US)
DOI10.1177/0170840611421251
OpenAlexW2144103353
LanguageEN
Citations received21
References cited43

In this paper, we examine the process of risk commodification involved in the creation of a market for weather derivatives in Europe. We approach this issue through an in-depth qualitative study in which we focus on the commensuration process by which promoters try to draw weather risk into the financial world. By offering a concrete description of a derivatives market as a meeting place between different metrics, our results highlight the failure of a process of commensuration - a phenomenon rarely studied empirically in the literature - and its unexpected results. Compared to existing research, we use the theoretical framework provided by Boltanski and Thévenot (2006) to enrich the literature on commensuration specifically as regards the different forms of agreement to which commensuration attempts can lead. Our results highlight the crucial role of a common interest for commensuration to succeed, and the conditions necessary for this common interest to occur. We conclude that there are limits to the thesis of financial theory, according to which all kinds of risk can be transformed into financial risk, and exchanged on financial markets

Commodification · Compromise · Phenomenon · Insurance and Financial Risk Management · Market Dynamics and Volatility · Risk Management in Financial Firms

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