In order to minimize basis risk – the technical term used to describe the potential mismatch between ARC payouts and country needs – the Secretariat engages each potential participating country and its in-country partners in a year-long process to customise Africa RiskView to the respective national context, using local expert knowledge and information to adjust settings and assess the model’s performance and ability to capture the impact of drought events on vulnerable populations. The whole process will be carried out by national Technical Working Groups and supported by the Secretariat.
The ARC Technical Working Group perform customisations by adjusting settings and testing new settings by comparing the corresponding Africa RiskView outputs against available quantitative and qualitative datasets. This defines an improved set of parameters that lead to Africa RiskView results which perform well across a range of metrics defined by the ARC Technical Working Group. At the country level, many datasets that describe past drought events exist. These include:
- Quantitative datasets, such as yield data, statistics published by regular food security or needs assessments, or data on historical operations and beneficiaries assisted by government and its partners; and,
- Qualitative data on past weather and climate disaster events and other food security emergencies, sourced from the knowledge of the highly qualified ARC Technical Working Groups, which can serve as a practical balance to purely numerical datasets.
Given the range of available data on past crises, the ARC Technical Working Group has many ways to build a robust historical dataset of weather-related impact and need in the country, which therefore serves as a baseline against which to compare Africa RiskView outputs and justify its customisation choices. In addition to allowing countries and their partners to review the efficacy of Africa RiskView for their risk management needs, this process will also ensure that stakeholders understand how the model works – its inputs and its limitations – and how it can be used as the basis for triggering early payouts when required in severe weather-related emergencies.
Given the complex nature of food security in sub-Saharan Africa, there is chance that ARC payouts will not occur in years in which the food need is high if the main drivers of that food insecurity are not weather-related. One of the objectives of the year-long Africa RiskView customisation process is for countries to better determine the extent that exogenous factors like drought/flood/tropical cyclone are the predominant risk factor in their country and thus if participation in ARC will bring potential efficiency gains. The ARC team is confident that basis risk can be addressed as thoroughly and accurately as possible through Africa RiskView customisation processes and through open discussions on alternative risk management strategies and investments.
To further minimize basis risk, ARC established the Africa RiskView Customization Review Committee to provide an added measure of assessment for customisations carried out by ARC Member States. The Customization Review Committee examines member state customisations on national, regional, and continental levels, and the committee further provides recommendations to ARC Technical Working Groups on how customisations could be improved. This third-party evaluation strengthens the customisation process and helps to build confidence in Africa RiskView customisations and its outputs. A detailed explanation of the responsibilities of the Customization Review Committee can be found here.