The example of ARC and ARC Replica September 2022 Anna Farina Crisis Anticipation and Disaster Risk Finance Operations Lead 50 MEMBERS 5 CURRENT HUBS 6 EMERGING HUBS WE ARE A GLOBAL NETWORK OF NGOS ID: 1036436
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1. The use of macro - sovereign level insurance as an early action mechanism in drought The example of ARC and ARC Replica September 2022Anna Farina Crisis Anticipation and Disaster Risk Finance Operations Lead
2. 50+MEMBERS5 CURRENT HUBS6 EMERGING HUBS WE ARE A GLOBAL NETWORK OF NGOS
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4. Disasters are possibleEarly Warning PeriodFor anticipatory action and responseDisaster ImpactAt SN we have 2 main financial instruments: Start Fund and Start Ready:Start Funds covers unpredictable risks and is an emergency funding mechanism that distribute flexible funds for small to medium size crisis within 72 hours from the raising of an alert from members. Start Fund also has an anticipatory window for those risks that can’t be modelled. Start Ready provides predictable triggered funding at scale for modellable crises – using innovative risk analysis, collective planning and pre-positioned financing. The window of Opportunity for Start Ready varies according to the type of crisis (slow or quick on-set crisis)START READY START FUND
5. Anticipatory and early action in drought:FbF vs index-based insurance
6. ARC and ARC Replica The African Risk Capacity is a risk management and resilience building platform that provides financial tools to help African member states to better manage risksRisks identified by member Governments are financed through macro parametric insurance policies purchased through funds allocated as part of the country annual budget Start Network (alongside WFP) joined the programme as ARC Replica partner in 2018 through the purchase of ARC policy in Senegal and few years later in Zimbabwe This programmes has 3 specific characteristics:Scientific model is used to determined the scale of the disasterTriggered based pay-outs are predictable and released automatically at the end of the rain seasonPre agreed operational plan is in place to avoid delays and enable efficient and pre-planned response
7. Implementation ahead of the following lean seasonDrought interventions timeline LEAN SEASON BASED PREVIOUS YEAR HARVESTAdaptive Anticipatory WindowFlex to avoid the impactsPre and Mid seasonProtective Anticipatory WindowPrevent the impacts causing human harmPost season, pre lean timesFBF WindowARC insurance window
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9. Insurance and FbF in the case of drought complementing each other Insurance pay-out are based on outcome of the rain season: early anticipatory protective actions are taken in anticipation of the lean season to mitigate food insecurityFbF intervention is based on seasonal forecast: with 6 to 3 moths lead-time asset creations programmes can be implemented; farmers can be trained on alternative agriculture techniques, drought resistant seeds can be distributed. FbF programmes are based on contingency funds and therefore no leverage effect is availableBoth mechanisms are based on data that are verifiable, independent and frequently measured. The 2 instruments can work in concert and be used by sequencing activities based on coordinated / complementary contingency plans. The approach can allow more effective, predictable and timely support mitigating the impact of the shock on affected populationFunds released by FbF and insurance should be integrated within a continuum of early warning, anticipatory action, Early Response Action and recovery and resilience programming
10. TIME LAYERINGNATIONAL RESERVES/ SOCIAL SECURITYCONTINGENCY FUNDINSURANCEOPERATIONAL READINESS / RESILIENCE BUILDING DROUGHT MATERIALISESEarly Action / Protective anticipationEARLY WARNINGAnticipatory Adaptive Action Forecast Based FinancingRISK LAYERINGDISASTER UNFOLD Traditional humanitarian responseLean seasonLONG TERM DRR POROGRAMMES / RESILIENCE BUILDING
11. Could layered instruments of funds and insurance be used across different windows of opportunity? ARC insurance pay-out is currently distributed at the end of a failed rain season and implemented by Governments and NGOs (with the support of Start Network and WFP) to mitigate food insecurity effects caused by drought and avoid disruptive copying mechanisms. Could insurance products release funds at different points in time during the season?Could insurance products be linked to seasonal forecast and therefore release funds in anticipation of drought?
12. FOR MORE INFORMATIONS:www.startnetwork.orgThanks for listening