On-Site Trading (“OST”) permits CWB clients to uniquely hedge and manage risk at the actual site location(s). Many insurance claims - whether agricultural, crop, car, home or otherwise – can be traced back to weather. OST pioneers a model that handles that basic tenet, and gives flexibility to really manage a client’s complete portfolio of risk.
By basing the hedge or protection on actual weather events on the client’s “site”, OST removes all subjective interpretation of “extrapolated” or “estimated” weather data. This allows each individual client to decide: 1) what kind of weather they would like to see happen in a certain period, 2) what kind of weather would have a negative financial impact on their business, and 3) what kind of weather they would be willing to pay for as a “fixed cost of production.” Using these three questions, OST can be utilized by CWB-clients to develop and implement a custom-tailored, comprehensive risk management solution.
Clients that look at OST as merely a different kind of insurance policy are focused too narrowly. Insurance protects only against loss. OST is a tool that allows clients, companies and industries that are largely affected by weather to take that weather completely out of the equation.