When Kim Bentzen graduated with a degree in meteorology in the 1990s, the only career path he saw was the National Meteorological Service in Denmark, and going into finance was never on his radar.
After five years in the government meteorological service and two stints working in sales at other companies, he applied for a job at Danske Commodities, an energy trading company. As the first meteorologist on staff, his bosses were still a bit unsure about how to use his skills on the trading floor – they left that part to him.
“I was there with a job description that just said, ‘Find out where you fit in and what we need.’ So it was pretty much up to me — where could I find a niche for myself or where could I find some kind of value that I could provide,” Bentzen said. . luck.
The world of finance is always changing, and the educational backgrounds of Wall Street traders change with it. Last month, BlackRock's COO told… luck One panelist said the company was focusing on candidates with liberal arts backgrounds in its hiring, not just traditional finance and business graduates. But there is one unexpected specialty that is growing in demand as companies adopt increasingly sophisticated trading strategies in the world of commodities and energy: meteorology.
Having long held weather jobs at television stations or government weather agencies, trained meteorologists are increasingly finding opportunities in finance. As climate change makes extreme weather events more common, and the emergence of renewable energy creates new energy markets, accurate weather forecasting is becoming an even more important feature.
“Industry absorbs meteorologists in a lot of applications — like the energy and transportation industry… and you can think of many other applications,” said Jenny Evans, a professor of meteorology and atmospheric sciences at Penn State and former president of the American Meteorological Society. luck.
In fact, the next few months could put their meteorological skills to the test. Traders are scrambling to brace for a record heatwave across the Northern Hemisphere this summer, which is expected to push commodity prices, including energy and crops, above historical norms. Bloomberg mentioned.
The rise in demand for meteorological expertise in finance has accompanied marine changes throughout the field in general over the past few decades. In the early 1990s, many forecasters were still drawing weather maps by hand, a far cry from the sophisticated computerized techniques that have since become common.
Today, Bentzen is part of a team of meteorologists working alongside Danske's trading floor, providing insight into how weather trends impact energy markets. Financial meteorologists like Bentzen and his team look at both short- and long-term forecasts: for example, estimating how weather conditions will affect wind turbine generating capacity over the next few hours or days, as well as how larger events like La Niña will affect them. Crop yields or solar energy production. It has created a new potential career path for recent graduates.
“In Denmark, people who work at the National Meteorological Institute are becoming more and more open to other places to work. It is something that is growing,” Bentzen said.
He noted that over the past five years he has witnessed a shift in the way Danish meteorology graduates think about where they want to work, and funding is “a possibility, if they want to pursue it.”
That's a welcome development for climate scientists who have been hurt by falling demand from traditional employers such as news stations, which have cut back on forecasting staff as computers make up the shortfall.
Interest in weather forecasting by the financial sector has swelled along with explosive growth in the market for catastrophe bonds, a $120 billion insurance-linked niche asset class, which outperformed the average hedge fund by 35% last year. Likewise for weather derivatives, the $25 billion market provides companies with protection from events such as severe storms or drought. In both markets, accurate weather forecasting is the ultimate advantage, giving investors the ability to spot inaccurately priced assets.
Perhaps more than any other company, Ken Griffin's $60 billion Citadel has leveraged forecasting expertise into a profitable trading strategy. the Financial Times mentioned Citadel's 20-person strong forecasting team, drawn from academia and national weather forecasting departments, has helped generate multi-billion-dollar revenue for the company's commodity arm. The castle declined to comment on this article.
As weather modeling techniques become more precise and companies continue to compete for alpha in markets such as commodities and catastrophe bonds, meteorologists can expect demand for their skills to continue to increase.
“The (financial) market is expanding as a career opportunity, especially for master’s and doctoral graduates,” Evans said. “The industry has found more and more ways to use it.”