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{"id":87217,"date":"2026-07-14T11:30:09","date_gmt":"2026-07-14T10:30:09","guid":{"rendered":"https:\/\/www.lse.ac.uk\/granthaminstitute\/?post_type=publication&p=87217"},"modified":"2026-07-14T11:30:09","modified_gmt":"2026-07-14T10:30:09","slug":"managing-basis-risks-effectively-balancing-the-trade-offs-from-uncertain-forecasts-for-anticipatory-action-and-disaster-risk-financing","status":"publish","type":"publication","link":"https:\/\/www.lse.ac.uk\/granthaminstitute\/publication\/managing-basis-risks-effectively-balancing-the-trade-offs-from-uncertain-forecasts-for-anticipatory-action-and-disaster-risk-financing\/","title":{"rendered":"Managing basis risks effectively: balancing the trade-offs from uncertain forecasts for anticipatory action and disaster risk financing"},"content":{"rendered":"\n

Extreme weather events such as droughts, storms, heatwaves or floods can have a devasting impact on people and communities, especially in more vulnerable regions of the world. Advance notice of these events can help individuals, governments and aid organisations to prepare. Taking anticipatory action such as distributing supplies, strengthening protective infrastructure, harvesting crops, providing shelter and evacuating people, can be much more effective at reducing the impacts of extreme weather than humanitarian action after the event.<\/p>\n\n\n\n

The challenge is that weather and climate forecast information, especially about extreme or unusual events, is inevitably limited and uncertain. This paper is a conceptual exploration of the use of uncertain information in anticipatory action and anticipatory disaster risk financing. It is grounded in detailed survey and interview data gathered from a cross-section of expert practitioners, including those working in national hydrometeorological services, international aid organisations and local government disaster risk management agencies.<\/p>\n\n\n\n

The paper advances our understanding of how anticipatory humanitarian action systems interact with available data and information, with a focus on managing forecast uncertainty.<\/p>\n\n\n\n

Key points for decision-makers<\/strong><\/h3>\n\n\n\n
\n
Anticipatory humanitarian action and risk financing schemes are underpinned by uncertain information on weather and climate<\/strong>. Acting on uncertain forecasts exposes the stakeholders to basis risk: the mismatch between intended and actual outcomes. To extract value from this uncertain information, it important to quantitively evaluate and respond to it in ways that capitalise on the opportunities it provides and limit potential downsides.<\/li>\n\n\n\n
Designing an anticipatory humanitarian system involves balancing a set of trade-offs between operational priorities (adaptability, lead times and simplicity) and financial priorities (consistency, confidence and accuracy). <\/strong>There is no single solution which meets the needs of all stakeholders; instead, participatory co-design can help to identify the appropriate choice of scheme parameters to manage operational and financial risks.<\/li>\n\n\n\n
Training and communication about the purpose and design of anticipatory risk financing schemes helps to support participatory co-design <\/strong>and ensure that basis risks, including the possibility of unexpected outcomes (either positive or negative) happening due to the forecast not being correct, are understood and can be managed.<\/li>\n\n\n\n
Sustained locally led investment in robust basic weather observing systems in under-resourced regions benefits all aspects of anticipatory action, including:<\/strong> the quality of data driving models; the ability to evaluate model and system performance; developing and maintaining the technical skills of the workforce; and building trust with communities.<\/li>\n\n\n\n
Data-led technical evaluation is vital<\/strong> for maintaining operational effectiveness and must be supplemented with practical evaluation of the contribution of systems to humanitarian priorities<\/strong>, including local perceptions of trustworthiness and effectiveness. Taking action in response to this evaluation can help minimise the risks in anticipatory systems, such as false alarms, missed events or the misallocation of resources.<\/li>\n<\/ul>\n\n","protected":false},"excerpt":{"rendered":"\n
This paper is a conceptual exploration of the use of uncertain information in anticipatory action and anticipatory disaster risk 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