This course explains Basis Risk in Weather Insurance and how the mismatch between index-based insurance triggers and actual crop losses is identified, assessed, and governed within Agri & Rural Commercial Credit. It covers the key dimensions of subsidies, insurance arrangements affecting viability and outcomes, sector risk, and collateral evaluation, emphasizing the need for structured assessment, clear boundary definition, and independent validation before credit decisions are finalized. The course also distinguishes Basis Risk in Weather Insurance from broader portfolio diversification strategies, and highlights its role within Schemes, Subsidy & Insurance Risk, including limit setting, exception handling, and escalation to credit committees.