African Risk Capacity (ARC)

The African Risk Capacity (ARC) Group 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 financing, the ARC Group 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 ARC Group is composed of two entities: ARC Agency, a Specialized Agency of the African Union, and ARC Insurance Company Limited (ARC Ltd), the financial affiliate of the Group.

ARC Agency is a mechanism that:

- Provides capacity building to ARC Member States in preparation for taking out a policy;

- Provides general oversight and supervision of the development of capacity building services;

- Facilitates the development of country contingency plans and monitors their implementation should a disaster event trigger a payout.

ARC Ltd is the financial affiliate of the Group responsible for carrying out commercial insurance functions of risk pooling and risk transfer in accordance with national regulations for parametric weather insurance.

Through its capacity building and risk pooling services, ARC’s objective is to strengthen the continent’s Disaster Risk Management systems through innovative solutions that take into account the continent's challenges. By capitalizing on local and international expertise, and considering the diversification of weather risk across Africa, the ARC offering enables countries to manage their risk as a group in a financially efficient manner in response to probable but uncertain risks. These techniques, while not new, can be applied by African countries in innovative ways to lower the cost of response to disasters before they become humanitarian crises and provide better service to those affected

Support Provider

The African Risk Capacity (ARC) is supported by a wide range of technical, financial, and institutional partners who contribute to its mission of enhancing disaster risk management and climate resilience across Africa.

These organizations provide capital, technical assistance, and policy support:

UK Foreign, Commonwealth & Development Office (FCDO)
German Development Bank (KfW) on behalf of BMZ
Swiss Agency for Development and Cooperation (SDC)
United States Agency for International Development (USAID)
Swedish International Development Cooperation Agency (Sida)
World Bank Group

These partners support ARC’s modeling, capacity building, and operational frameworks:

World Food Programme (WFP)
UNICEF
FAO
African Development Bank (AfDB)
Global Center on Adaptation (GCA)
World Meteorological Organization (WMO)

ARC collaborates with:

National Meteorological and Hydrological Services
Ministries of Finance, Agriculture, and Disaster Management
Civil Society Organizations and Academia
Regional Economic Communities (RECs)

ARC Ltd works with global reinsurers and brokers to manage risk and expand coverage

Purpose of Support

Strengthening enabling environments and stakeholder capacity

Other

The monitoring and reporting procedures of the African Risk Capacity (ARC) are structured to ensure transparency, accountability, and effectiveness in disaster risk financing and response.

Africa RiskView is ARC’s technical backbone for monitoring weather and climate data. This includes the following:

It tracks rainfall patterns, drought indices, and food security indicators.

ARV generates regular bulletins that provide updates on:

Current climate conditions

Estimated response costs.

Potential impacts on vulnerable populations.

After each agricultural season, ARC publishes End-of-Season Reports for participating countries.

These reports assess:

The accuracy of ARV forecasts.

The actual impact of climate events.

The effectiveness of contingency plans.

For events like cyclones or droughts, ARC issues Post-Event Briefings summarizing:

Event severity and geographic impact.

Response actions taken.

Lessons learned.

ARC commissions independent evaluations of its payout processes and country-level interventions.

These evaluations assess:

Timeliness and adequacy of payouts.

Efficiency of fund utilization.

Socioeconomic impact on affected communities.

ARC publishes “Lessons Learnt” documents to improve future operations. These include recommendations for:

Enhancing contingency planning.

Strengthening early warning systems.

Improving coordination with national disaster agencies.

The Organizational and Decision-Making Structure can be found here

Eligibility criteria for accessing ARC can be found below:

Only African Union (AU) member states are eligible to participate in ARC programs and access funding.

Countries must be in good standing with ARC, which includes:

Compliance with ARC’s governance and operational standards.
Fulfillment of financial obligations, such as premium payments.

Countries must adopt and customize Africa RiskView, ARC’s risk modeling software, to monitor climate risks and estimate potential impacts.

A country must submit a detailed contingency plan that outlines how ARC funds will be used to assist affected populations. This ensures:

Timely and effective response.
Accountability and transparency in fund usage.

To access ARC Ltd’s sovereign insurance pool or participate in mechanisms like the Extreme Climate Facility (XCF), countries must be premium-paying members.

For programs like REPAIR, countries must:

Conduct environmental and social due diligence.
Comply with national and international standards (e.g., World Bank frameworks).
Follow ARC’s Project Operations Manual (POM) and Exclusion List.

These criteria ensure that ARC funding is used efficiently and reaches vulnerable populations quickly when disasters strike.

African Union Member States that sign the ARC Establishment Agreement become ARC Member States and are eligible to participate in and benefit from ARC’s disaster risk management facilities, as well as contribute to the governance of ARC through the Conference of Parties. See a list of eligible countries here.

Information on how to

Participate in ARC by following steps in the country engagement proccess. Countries must undertake several processes, including customizing the Africa RiskView software, signing a Memorandum of Understanding for in-country capacity building, defining a contingency plan for ARC payouts, and determining risk transfer parameters. When countries have satisfactorily completed this process, they will receive a Certificate of Good Standing from the ARC Agency Governing Board, and will pay a premium to ARC Ltd, after which they will be members of the risk pool. To receive a payout, countries develop Final Implementation Plans that elaborate upon the pre-approved Contingency Plans to facilitate targeted interventions that respond quickly and effectively to the populations impacted by disasters.

Find additional information on the country engagement process here.