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 a Capacity Building Programme. Through this programme, government experts complete milestones in risk modelling, contingency planning and risk transfer. The programme’s work streams consist of:
1. Introduction to Disaster Risk Financing and Country Engagement
Technical experts and senior political officials are introduced to the concepts and approach of ARC. The ARC Capacity Building Programme is designed with the help of technical experts. Relevant programmes and existing platforms within the country are identified to ensure that ARC programmes are embedded within national programmes.
2. Early Warning & Africa RiskView
Technical experts in key ministries and departments are trained in the use and customisation of Africa RiskView,
ARC’s proprietary software and model to estimate disaster risk . The software application was developed to define the country’s weather risk profile, underpin ARC Ltd parametric insurance products and trigger early disbursements of funds. Technical experts are trained to use and customize Africa RiskView with data on historical rainfall averages, vulnerability assessments, and national agronomy. This key step allows governments to develop a country risk profile and through this to determine the relevance and appropriateness of using various risk management tools such as ARC.
3. Contingency Planning
In order to take out insurance from ARC Ltd, a country must develop a Contingency Plan governing the use of any ARC Ltd insurance payout, and it must be approved by the ARC Governing Board. ARC works with in-country technical experts in emergency response and social protection to explore existing contingency funding mechanisms in the country that could be complemented by ARC and to look at supporting the scale up of existing social protection programmes. ARC can help protect gains made under these regular programmes from being wiped away by weather-related risks.
With advisory support from ARC, the country develops a Contingency Plan that meets the Certificate of Good Standing (CGS) Standards established by the ARC Governing Board.
4. Risk Transfer
Finance and disaster management experts in key government departments are introduced to risk transfer concepts and ARC 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 to transfer risk via insurance policies to ARC Ltd. ARC will assist Member States to determine the optimal level of risk to transfer to the market, and how such a strategy fits into the overall national risk management strategy. Finally, it also looks at how risks not covered by ARC are managed.
The selection of “Insurance Parameters” that will determine the amount of risk transferred to the pool, and therefore the amount a government could expect to receive in the event of a drought – which in turn will determine the required premium amount to purchase that coverage.
The ultimate objective of the Capacity Building Programme is to enable governments to make an informed decision regarding transferring the country’s natural risks to ARC. While completing the Capacity Building Programme prepares countries to pool and transfer their risk to ARC Ltd, joining the risk pool is left to the discretion of each government.