One of the most promising developments to look out for this year is ‘forecast-based financing’ (FbF). Supported by the German government, German Red Cross and The Red Cross Red Crescent Climate Centre and being implemented by National Societies in several countries, this is a rapidly developing system that smartly utilizes the window between forecast and hazard in order to save resources, belongings and, most importantly, lives.

What you need to know about FbF

FbF is a system designed to automatically trigger action based on forecast information, data collection and observation. The interesting thing here is that the system matches thresholds and forecast probabilities with appropriate actions according to the level of risk. Each level has its own standard operating procedures (SOP) that ensure funding will not be used for measures that might not be worth taking. In other words, forecasts with a greater likelihood of disaster would require more expensive actions, in contrast to forecasts with a small likelihood of disaster, which would lead to cheaper actions with low regret should disaster be avoided. Let’s look at an illustrative example;

Are there risks of spending resources in vain? Unfortunately, yes. Since no forecast is 100% accurate, early action might sometimes be taken without the event occurring as expected. Over time, however, the return on investment would become affordable because less funds are needed to support established preparedness plans than are needed to repair highly-damaged goods.

You will not believe what happened here

In mid-September 2016, the Togolese Red Cross piloted forecast-based financing during a real-life situation and was paid-off with very good results.By the time the Nangbeto river dam reached dangerous levels, the Red Cross had already deployed the operating procedures, which targeted almost 30 downstream communities and included live radio spots, cholera prevention hygiene kits, traps to waterproof shelters, among other evacuation supplies supported in Togo by Germany’s Federal Ministry for Economic Cooperation and Development and the German Red Cross.

This operation was combined with ‘FUNES’ (for ‘functional estimation’), a self-learning algorithm that predicts flood risk in the populous Mono River basin. The data was captured by 1000 trained Red Cross volunteers who made observations of rainfall and river levels and submitted the information using a very practical SMS system developed by specialized scientists.

Master preparedness with the FbF virtual reality experience

If FbF is not amazing enough, you should definitely try its virtual reality counterpart, developed by Pablo Suarez of the Climate Centre and co-designed with James Morgan and VYSION. This game not only manages to accurately explain FbF, but enables interaction with real scenarios and creates a sense of how hard decision-making can be on the edge of an imminent disaster. It is supported by GFDRR. Click here to try this adventure using your smart phone. Also, check out the complete story here.

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