What is the use of derivatives in business?

What is the use of derivatives in business?
Derivatives as the name suggests derive its value from an underlying asset. The main purpose of derivatives is to hedge the risk. Hedging means it helps to reduce the risk but it does not necessarily eliminate the risk. However it needs special precaution to take when one is going to use the derivatives otherwise it will be like a double edged sword.
Business like banks and corporate use derivatives to hedge the fluctuations in the market, be it the interest rate or the currency. Fluctuations in interest rates are the ones where banks are interested to use interest rate future(used as derivatives),plain vanilla interest rate swap etc.
A company like CocaCola might be interested to hedge its risk of not getting profit if the season for its coke does not pick up due to bad weather ahead. One can not predict the weather so in this case derivatives like weather derivatives are used to hedge the risk.
However as a market participant one can use the derivatives for the purpose of trading also. Trading on options or futures where shares or indexes can be an underlying asset. Traders also try to guard against the falling stock market.
There are different inputs required for them which are mostly mathematical and statistical. Those instruments has to be priced using some methods which are always complex. Different complex strategies like stradle and strangle etc are used in case options.
It is a kind of insurance against the probable losses in future. But one has to do it cautiously otherwise there will be the opposite impact.