Case Studies

Quantification of Basis Risk


Background & Challenges

  • Identification of various sources of basis risk
  • Poor Quality Data
  • Create a methodology that works in most of the regions and maximum crop type


Our Approach

  • Collected plot level cost of cultivation data and mapped it to tehsil and zone level
  • Identified phases of framing cycle to segregate total rainfall and temperature for each phase
  • Collected the term sheets for each district for the relevant crop and calculated basis risk, using actual versus covered losses ­ to determine basis risk
  • Defined new termsheets based on Gridded IMD data to arrive at a lower basis risk


Deliverables

  • Peer reviewed paper on quantification of Basis Risk
  • Weather Insurance Product with Minimal Basis Risk