African Risk Capacity:
Transforming disaster risk
management & financing in Africa

About ARC

The African Risk Capacity (ARC) is a Specialized Agency of the African Union established to help African governments improve their capacities to better plan, prepare, and respond to extreme weather events and natural disasters.

Through collaboration and innovative finance, ARC enables countries to strengthen their disaster risk management systems and access rapid and predictable financing when disaster strikes to protect the food security and livelihoods of their vulnerable populations.

The African Risk Capacity is comprised of two entities: the African Risk Capacity Agency and the ARC Insurance Company Limited. Together, they provide ARC Member States with capacity building services and access to state-of-the-art early warning technology, contingency planning, and risk pooling and transfer facilities.

ARC's Impact

$ 30000000
in payouts for early responses
> 2000000
vulnerable people assisted
>$ 350 million
in drought risk coverage provided

The Method

African Risk Capacity provides capacity building for and access to a comprehensive disaster risk management & financing system. Working with closely with African governments, we implement efficient and sustainable solutions that address country needs.

Customised Early Warning

Africa RiskView is a state-of-the-art drought risk model & software that helps countries quantify their disaster risk & monitor drought impacts.

Contingency Planning

African Risk Capacity works with governments and in-country experts to create coordinated contingency plans before catastrophe strikes.

Parametric Insurance​

African Risk Capacity disburses financing to fund pre-approved contingency plans to respond rapidly and predictably to disasters.

Risk Pooling & Risk Transfer

Employing innovative financing mechanisms, ARC Insurance Company Limited pools risk across Africa and transfers it to international risk markets.

ARC Member States

African Risk Capacity is run by 33 African Union Member States that signed the ARC Establishment Treaty to create a Specialised Agency dedicated to helping African governments improve their disaster risk management capacities.

Formed by African Union Member States to harness innovative financial mechanisms, the African Risk Capacity employs pan-African solidarity to pool continental knowledge and resources towards addressing the impacts of natural disasters.

Find out more about

Testimonials

We need better policies and planning to allocate water resources and to distribute the risks arising from water‑related disasters in a more equitable way. One successful example is the African Risk Capacity, which has created a risk pooling facility to meet the needs of communities hit by severe drought.

Amina J. Mohammed

Deputy Secretary-General of the United Nations

Photo: UNFCCC
Photo: African Union Commission

What we would like to see is more African governments taking advantage of this institution – of our institution. This is solidarity combined with innovation in practice.

Thomas Kwesi Quartey

Deputy Chairperson of the African Union Commission

Africa contributes no more than 2-3% of greenhouse gas emissions but suffers disproportionately from the negative impacts of climate change. Africa has been shortchanged by the climate financing architecture. Therefore, we need instruments that will help mitigate climate risks

Akinwumi Adesina

President of the African Development Bank

Photo: UNFCCC

Products

Drought

ARC’s initial product offering and the first parametric insurance product for drought in the world, the drought risk model and insurance product has helped African governments quantify their drought risk and respond early to the impacts of drought events

River Flood

Responding to pressing climate risks on the continent, African Risk Capacity is developing a risk model and parametric insurance product for river floods. The index-based insurance product will be the first of its kind globally and will respond to the disruptive impacts of river floods to African livelihoods and economies.

Outbreaks & Epidemics

Following the devastating Ebola outbreak in West Africa, African Risk Capacity is developing a parametric model and insurance product to address countries’ financing needs in containing outbreaks of viruses and diseases common to the African continent.

Tropical Cyclone

Addressing the climate risks of the South West Indian Ocean states, African Risk Capacity has been developing a product to provide rapid financing and early response to tropical cyclones and the wind, storm surge and wave damage that they cause.

Extreme Climate Facility (XCF)

ARC is developing the Extreme Climate Facility (XCF), a data-driven, multi-year, insurance-like vehicle that will provide financial support to eligible AU countries based on a multi-hazard index. XCF will be a mechanism for African states to access financing to respond to the impacts of increased climate volatility.

Updates

News archives

UNFCCC’s CoP21 Devex – December 21, 2015 Africa: $150 million for climate-related disaster risk insurance Artemis – December 17 2015 ARC gets $150m in support from COP21 countries IRIN –…

Outbreaks & Epidemics

How to tackle the funding gap for public health emergencies in Africa: piloting an innovative financing mechanism for outbreaks and epidemics The Problem: A single Ebola outbreak in 2014-15 in…

Africa RiskView: Customisation

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…

Africa RiskView: Methodology

The Africa RiskView models and software products  are offered to countries working with the ARC Agency. Its models have been designed to be adapted and customised to work within national frameworks,…

Africa RiskView: Introduction

The first step to establishing a facility such as ARC is understanding — in dollar terms — Africa’s weather-related food security risk. As the technical engine of the ARC risk…

Food Security & Risk Management

In January 2012, the ARC commissioned a cost-benefit analysis (CBA) to examine the economic advantages and disadvantages of establishing a risk pooling facility as an early response mechanism to severe…