The appearance this year of the El Niño weather pattern, the periodic warming of the tropical Pacific Ocean by a few degrees, is leading to a burst of interest in weather derivatives – financial contracts designed to protect company profits from the costs of extreme weather. Meteorologists believe the current El Niño could be one of the strongest on record and expect its worldwide effects to peak during the North American winter of 1997–98.

Bruce Reed, vice-president of product development at