This course offers a comprehensive exploration of weather derivatives as essential financial instruments for managing climate-related risks. Participants will delve into advanced modeling techniques, including time-changed Ornstein-Uhlenbeck (OU) processes, used to price temperature-based derivatives. Designed for financial professionals, risk managers, and environmental economists, this course covers both theoretical foundations and practical applications of weather derivatives in sectors such as utilities, agriculture, and construction.

Key topics covered in this course include:

• Introduction to weather derivatives and their role in climate risk management.
• Modeling temperature fluctuations using stochastic processes.
• Advanced pricing methods for temperature futures and options using eigenfunction expansion.
• Risk management strategies for businesses affected by climate variability.
• Real-world applications in energy, agriculture, and insurance sectors.

By the end of this course, participants will gain practical skills to design, price, and manage weather derivatives effectively, enabling them to mitigate financial risks associated with climate uncertainty and seasonal weather fluctuations.