The ARC Capacity building programme
The ARC capacity building programme aims to prepare African governments for effective Disaster Risk Management through the introduction of tools and processes that enhance the multidisciplinary response of governments to natural disasters. Member States interested in purchasing insurance first enter into a Memorandum of Understanding with the ARC Agency which commits them to the capacity building programme. Through this programme, experts from key government departments have to complete milestones in risk modelling, contingency planning and risk transfer – all critical to understanding parametric insurance and owning the process to enable the country make an informed decision on the product. The programme consists of the following workstreams:
- Introduction to Disaster Risk Financing and Country Engagement
Technical experts and senior political officials are introduced to disaster risk financing through ARC concepts and its approach. The ARC capacity building programme is designed collaboratively between ARC and the government’s focal ministry including relevant technical experts. The programme structure where necessary leverages on existing relevant programmes and platforms within the country to ensure that ARC programmes are embedded within national programmes.
- Early Warning & Africa RiskView Risk Modelling
Technical experts from key ministries and departments, who form part of a Technical Working Group, are trained in the use and customisation of Africa RiskView, ARC’s proprietary software and model to quantify drought risk. The software application was developed to define the country’s weather risk profile, underpin ARC Ltd’s parametric insurance products and trigger early disbursements of funds following a disaster event. Technical experts are trained to use and customise Africa RiskView with data from historical rainfall averages, vulnerability assessments, and national agronomy. This key step allows governments to develop a country drought risk profile and through this, determine the relevance and appropriateness of using various risk management tools such as ARC’s risk transfer product. Similar training is carried out for Tropical Cyclone risk quantification and use of the TC explorer, a software interface for the Tropical Cyclone model.
- Contingency Planning
In order to take out insurance from ARC Ltd, a country must develop a contingency plan outlining the use of any ARC Ltd insurance payout in case of a disaster. With advisory support from ARC, the country develops an operations plan that meets the Certificate of Good Standing (CGS) Standards established by the ARC Governing Board. ARC works with in-country technical experts in emergency response and social protection to explore existing contingency funding mechanisms and response activities in the country that could be complemented and used by ARC payout and to consider supporting the scaling-up of existing social protection programmes. These plans must go through independent reviews to by experts in contingency planning and humanitarian response as well as the Peer Review Committee of the ARC Board to assess their feasibility before they are approved by the ARC Governing Board. Through its work, ARC can help protect gains made under these regular programmes from being wiped away by weather-related risks
- Risk Transfer
Finance and disaster management experts in key government departments are introduced to risk transfer concepts and ARC’s parametric insurance. Particular emphasis is placed on building an understanding on how risk transfer fits into the broader risk management framework for the country. This work stream covers the relationship between the country’s risk profile and a government’s considerations in deciding on what level of risk to retain as a country and what part to transfer via insurance to ARC Ltd. ARC assists Member States to determine the optimal level of risk to transfer to the market, and to understand how such a strategy fits into the overall national risk management strategy. Finally, it also looks at how risks not covered by ARC (retained risk) are managed.
The TWG experts are trained to understand ARC’s risk transfer parameters and the selection of insurance parameters that will determine the amount of risk transferred to the risk pool, and therefore the amount a government could expect to receive in the event of a disaster event – which in turn will determine the required premium amount to purchase the insurance coverage.
The ultimate objective of the capacity building programme is to enable governments to make an informed decision regarding transferring the country’s weather risks to ARC. While completing the capacity building programme prepares countries to transfer part of their risk to ARC Ltd and participate in the ARC’s risk pool, ultimate decision to join the risk pool is left to the discretion of each government.