A. Risk Monitoring and Minimum
Preparedness Action


The risk analysis and monitoring of the ERP approach is considered to be the first component under the ‘prepare’ phase. This is already described in Phase 1 Prevention (see section A Risk Assessment). In general, the risk analysis identifies the extreme weather events that could cause a loss and determines whether thresholds are low, medium or high. The development of a contingency plan is recommended when risk thresholds are defined to be medium or above (see Phase 2.A Step 3). The risk monitoring should be undertaken to provide early warnings, which allow for early action such as scale-up of drought-resilient agricultural cultivation practices, and dissemination of climate information to support decision-making.


Out of these categories, only those activities that are of specific relevance for the insurance focus of the publication are selected:

Brief Description

Minimum Preparedness Actions are a set of activities that every country team must implement in order to establish a minimum level of emergency preparedness. The MPAs are not risk-specific and usually do not require significant additional resources to implement activities such as preparing for joint needs assessments, gap analysis, information management, coordination and operational capacity. Developing an early warning system is one crucial activity under the MPA and a basis for early action.

Involved Actors

See the introduction section of the ‘Preparedness’ phase, above.


Early warning could lower insurance premiums

Establishing early warning systems and strategies is most crucial for protecting people and their assets (including public infrastructure). In addition, better asset protection through ‘early warning − early action’ could possibly lower the cost of premiums for indemnity-based insurance (micro level) and of index products for governments (macro level).

Early warning could trigger ‘forecast-based payouts’ for reducing the impact of disasters

The insured to take corrective action prior to the extreme weather event when the payout of index insurance is triggered by early warning information before the event occurs.

EXAMPLE: The African Risk Capacity is a pan-African agency that provides weather insurance to African governments for risks within the agricultural sector, e.g. flood and drought. It develops a complex early warning service as part of a comprehensive insurance solution, African RiskView, that combines existing rainfall-based early warning models on agricultural drought with data on vulnerable populations for estimating food insecurity response costs across the continent. The information on probable maximum costs of drought-related responses before an agricultural season begins is critical for financial preparedness for drought, and for providing the basic infrastructure needed to establish and manage a parametric risk pool, and trigger early disbursements (‘forecast-based payout’). It further helps in preparing contingency planning and investment decisions aimed at enhancing agricultural productivity or market development.

Insurance data useful for preparedness − early warning

Involving the insurance industry in data provision for weather forecasts enhances the quality of early warning systems in the agricultural sector.

Significant data for setting up an agricultural monitoring framework and a food security early warning system can be obtained from the insurance industry (see Box 10, below).

Coordination with insurers smoothens payouts after disasters

Including insurers in the coordination mechanisms can enable them to prepare for effective payout structures that need the cooperation of other agencies after extreme weather events when public infrastructure is damaged (see Philippines example in Phase 4. A Step 2).

Significant data for setting up an agricultural monitoring framework and a food security early warning system can be obtained from the insurance industry (see Box 10, below).

Insurers can enhance the capacity of governments

The information of pan-national insurance pools and reinsurers can enhance the capacity of governments when developing their DRM strategies.

EXAMPLE: ARC services include an up-to-one-year capacity development period to the member governments for developing a tailored insurance coverage, contingency plans, and prevention mechanisms for BBB.

Governments can contribute to risk and insurance awareness-building

Insurance literacy can be integrated into government agricultural, veterinary and DRM awareness campaigns, especially when conducted with a long-term view (e.g. through agricultural extension services or national disaster management agencies/offices).