The African Risk Capacity (ARC), an agency to help African countries to better plan and prepare for and respond to extreme weather events and other natural disasters was established in 2012 by the African Union (AU) Head of States in order to respond to the foregoing challenges of natural disasters and outbreaks. In 2014, the ARC agency launched its affiliate insurance arm, ARC Insurance Company Limited, to carry out the commercial insurance functions. By linking early warning systems with contingency planning and supported by modern financial mechanisms (specifically insurance), ARC enables governments to provide targeted responses to disasters in a more timely, cost-effective, objective and transparent manner, thereby reducing response costs to governments and loss of livelihoods.