Abstract Risk management has reduced vulnerability to floods and droughts globally 1,2 , yet their impacts are still increasing 3 . An improved understanding of the causes of changing impacts is therefore needed, but has been hampered by a lack of empirical data 4,5 . On the basis of a global dataset of 45 pairs of events that occurred within the same area, we show that risk management generally reduces the impacts of floods and droughts but faces difficulties in reducing the impacts of unprecedented events of a magnitude not previously experienced. If the second event was much more hazardous than the first, its impact was almost always higher. This is because management was not designed to deal with such extreme events: for example, they exceeded the design levels of levees and reservoirs. In two success stories, the impact of the second, more hazardous, event was lower, as a result of improved risk management governance and high investment in integrated management. The observed difficulty of managing unprecedented events is alarming, given that more extreme hydrological events are projected owing to climate change 3 .

• Most conceptual bucket models have an upper limit on simulated soil moisture deficit. • Problems arise when the bucket “empties” because ET drops to unrealistic (low) levels. • Alternatives include bottomless buckets or deficit-based soil moisture accounting. • Here, we switch to a deficit-based scheme while keeping everything else constant. • Tested over historic drought, model performance and realism are enhanced. Rainfall-runoff models based on conceptual “buckets” are frequently used in climate change impact studies to provide runoff projections. When these buckets approach empty, the simulated evapotranspiration approaches zero, which places an implicit limit on the soil moisture deficit that can accrue within the model. Such models may cease to properly track the moisture deficit accumulating in reality as dry conditions continue, leading to overestimation of subsequent runoff and possible long-term bias under drying climate. Here, we suggest that model realism may be improved through alternatives which remove the upper limit on simulated soil moisture deficit, such as “bottomless” buckets or deficit-based soil moisture accounting. While some existing models incorporate such measures, no study until now has systematically assessed their impact on model realism under drying climate. Here, we alter a common bucket model by changing the soil moisture storage to a deficit accounting system in such a way as to remove the upper limit on simulated soil moisture deficit. Tested on 38 Australian catchments, the altered model is better able to track the decline in soil moisture at the end of seasonal dry periods, which leads to superior performance over varied historic climate, including the 13-year “Millennium” drought. However, groundwater and GRACE data reveal long-term trends that are not matched in simulations, indicating that further changes may be required. Nonetheless, the results suggest that a broader adoption of bottomless buckets and/or deficit accounting within conceptual rainfall runoff models may improve the realism of runoff projections under drying climate.