To a large part, these weather risk assessment tools exist because of the increasing cost-effectiveness of computer hardware. This development, along with the availability of high-speed networks, has also opened the door to the practical technology transfer of Numerical Weather Prediction (NWP) models into the weather risk assessment industry.
A number of the issues associated with weather risk assessment for the insurance and financial industries can be addressed as applications of NWP modeling technology. One issue that is of special interest is quantifying uncertainty. The advent of ensemble NWP modeling, now possible thanks to increasingly cost-effective computing power, provides opportunity to quantifying uncertainty. This presentation will discuss why quantifying uncertainty is important for characterizing vulnerability to extreme events and in valuing weather derivatives. Examples of how information about uncertainty, based on ensemble NWP model output, can be graphically visualized to aid in assessing weather risk will also be presented.