Parametric Risk Management Solutions

Building Resilience in Agriculture

Agricultural Risk Management in a Changing Climate: Building Resilience

Agriculture, as one of the most weather-dependent sectors, faces increasing risks from adverse weather, crop-yield volatility, natural catastrophes, and price related exposures. Rising temperatures and shifting rainfall patterns challenge food production, causing economic uncertainty. Munich Re's AgRisk Partners offer tailored agricultural risk management solutions to enhance the sector's resilience and sustainability.

With extensive experience, our team provides efficient strategies to mitigate the financial impacts of adverse weather and climate events. Whether you are a farmer, an agribusiness, or food producer, our expertise helps safeguard your operations and secure a stable future.

Weather and Price Risks Affect the Entire Agricultural Supply Chain

How Parametric Risk Transfer Works

Parametric solutions offer fast, innovative, and data-driven alternatives to traditional insurance and hedges by using predefined triggers and trusted, third-party for swift settlement. Here's how it works:

Event Definition: Events such as adverse weather, crop-yield levels, natural disasters, or commodity price movements are contractually defined.
Event Occurrence: When the predefined event occurs, the payout can be determined quickly utilizing trusted, third-party data.
Streamlined Settlement: Using data circumvents traditional claims processes, securing liquidity faster and minimizing the operational burden on clients.

Parametric products are providing new solutions to previously unmanageable risks, faster settlement, and greater transparency, pioneering a new future in financial stability.

We Deliver Solutions Along the Entire Value Chain

Area Yield Index

Exchange-traded futures and options can protect against commodity price movements but cannot effectively offset financial losses caused by local crop shortages. Munich Re’s Area Yield Index (AYI) bridges this gap in risk management by leveraging trusted, governmental yield statistics to develop a straightforward parametric yield index that can eliminate financial losses caused by localized crop shortages.

Factsheet

Adverse Weather Index

Munich Re’s Adverse Weather Index (AWI) offers companies protection against financial losses caused by adverse weather events, such as drought, excessive rainfall, heat stress, cold spells, and damaging winds.

Factsheet

Modeled Yield Index

Munich Re’s Modeled Yield Index (MYI) offers an alternative to public yield statistics when governmental data is unavailable, untrustworthy, or lacks the desired resolution. The MYI achieves client goals by creating a digital replica of the underlying cropland yields, and maintains objectivity by utilizing a third-party provider, enabling financial risk transfer previously resting on clients’ balance sheets.

Factsheet

Contingent Price Index

In addition to yield and weather risk, price risk is a major concern. Traditional tools, such as forwards and futures, are complex, and traditional options can be costly. Munich Re’s Contingent Price Index (CPI) provides a solution by triggering price protection when yield or weather conditions are adverse, offering more tailored solutions and economic efficiencies that were previously unavailable.

Factsheet