What is Forecast-based Financing?
FbF is an approach which enables access to humanitarian funding for early action, that can be taken based on meteorological forecast information, combined with risk analysis, to prepare for extreme weather events. The goal of FbF is to anticipate disasters, prevent their impact, if possible, and reduce human suffering and losses.
The FbF approach consists of three components:
Triggers – Based on detailed risk analysis of relevant natural hazards, impact assessments of past events and vulnerability data, “danger levels” for a region are identified. Then, a forecast trigger is selected that will give notice before the “danger level” is reached. Selection of actions – The pre-defined actions that will be implemented at the time of a triggering forecast to reduce the humanitarian impact of an event. Financing mechanism – An ex-ante financing instrument that automatically allocates funding once a forecast is triggered, which enables the effective implementation of early actions. These components are summarized in an Early Action Protocol (EAP). The EAPs serve as action guidelines that delineate roles and responsibilities for quick action when a trigger is reached.
Forecast-based Action by the DREF
For Red Cross and Red Crescent National Societies, one of the financial mechanisms available to fund the activities included in their Early Action Protocols is the Forecast based Action (FbA) by the DREF, which was launched in May 2018.
A key element of the FbA by DREF, is the guaranteed allocation of funds for early action, once a National Society has an EAP that has been approved by the validation committee. Financial allocations will be done automatically by the FbA by DREF according to a pre-agreed forecast trigger, that indicates the potential for severe negative impacts on the most vulnerable population.
The FbA by the DREF provides multilateral funding to National Societies who have an already developed EAP. The funding is pre-agreed in advance for the implementation of the EAP, which is one of the key elements of Forecast based- Financing.
The Forecast based Action Fund is managed by the IFRC Disaster and Crisis, Prevention, Response and Recovery department.