Description: Presented at August 2011 Actuarial Research Conference. Provides examples of how to model extremes in weather utilizing Monte Carlo simulations and discusses how to create a derivative financial instrument that pays-off if target extreme weather conditions are met.

Description: Institutional investors seeking to hedge have no shortage of choices, and need the right framework to manage the different risks in portfolios as they arise. This article analyzes performance of different equity hedging strategies over the last 15 years, and lays out a potential hedging framework that takes into account types of risks being hedged, fundamental views, and current market pricing of protection.