In this paper, we bridge the gap between paradox theory and a system level perspective to study how system level dynamics initiate and drive multi actor paradoxes in the response to the grand challenge of climate-induced disasters. We show how multiple actors engage in contradictory yet interrelated practices that fuel paradoxical dynamics and finally create a non-optimal but stable equilibrium that inhibits system change. We explore this process through a longitudinal ethnography study on the implementation of the “Forecast-based-Financing” approach in Uganda; an approach that shall initiate early action in anticipation of disasters. Our findings reveal how stakeholders’ implementation practices drive paradoxical dynamics that constitute self-reinforcing dynamics. Drawing on these insights, we develop a process model that explains how paradoxical dynamics not only hinder the tackling of the grand challenge but stabilize each other, contributing to a path dependent development. We contribute to theory in at least two ways: first, we theorize how addressing grand challenges instigates an interplay of paradoxical dynamics which create non-optimal but stable, path dependent equilibria on a system level which are difficult to change. Second, we introduce a dynamic perspective on paradoxes, thereby moving beyond the perspective of stable paradox poles that can be embraced.